Oil industry must boost investments to ensure supplies: Opec
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