Oil in­dus­try must boost in­vest­ments to en­sure sup­plies: Opec

The Sun (Malaysia) - - SUNBIZ -

PARIS: The Or­gan­i­sa­tion of the Pe­tro­leum Ex­port­ing Coun­tries (Opec) car­tel warned on Tues­day that the oil in­dus­try needs to step up in­vest­ments to guar­an­tee suf­fi­cient sup­ply as low prices stim­u­late de­mand.

“Given the de­mand and sup­ply out­look, there is a need for sig­nif­i­cant in­vest­ments across the en­tire in­dus­try,”Opec said in its an­nual re­port on the sec­tor.

The 14-na­tion group, which sup­plies around a third of global crude, said it sees a need for around US$10 tril­lion (RM42 tril­lion) of oil-re­lated in­vest­ments be­tween now and 2040.

“While the re­cent oil mar­ket en­vi­ron­ment has been one of over­sup­ply, it is vi­tal that the in­dus­try en­sures that a lack of in­vest­ments to­day does not lead to a short­age of sup­ply in the fu­ture,” Opec warned.

Oil com­pa­nies have slashed in­vest­ment, can­celling or post­pon­ing projects, as they re­act to the price of crude fall­ing from over US$100 bar­rel in mid2014 to un­der US$30 at the be­gin­ning of this year.

Prices have since re­cov­ered to around US$45 per bar­rel, but the mar­ket still re­mains sat­u­rated with sup­plies, and the car­tel now ex­pects prices to in­crease only slowly and thus con­trib­ute to an ad­di­tional de­mand of one mil­lion bar­rels by 2021.

Ac­cord­ing to Opec in­vest­ments in oil ex­plo­ration and pro­duc­tion dropped by US$130 bil­lion to roughly US$400 bil­lion in 2015, and should fall an­other US$80 bil­lion this year. – AFP

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