SA to gain from US oil production
US SHALE oil producers are plotting ambitious production growth outside the red-hot Permian Basin in Texas. This could result in a widening resurgence that could confound the Organisation of the Petroleum Exporting Countries’ (OPEC) strategy to tighten global supplies and bring down oil, petrol and diesel prices.
Should the plan by the Americans materialise, it will be good news for South Africans, especially considering that Finance Minister Pravin Gordhan announced during the Budget Speech that motorists will from next month pay 39 cents a litre more due to fuel and Road Accident Fund levies.
As shale firms rebound from a two-year price war with OPEC, many are planning to expand production in North Dakota, Oklahoma and other shale regions. The Permian, America’s largest oilfield, has already seen output jump in the past six months. Hess, Chesapeake Energy, Continental Resources and other firms detailed their growth plans at an energy conference in Houston this week.
The projects they outlined would result in a steady supply of American crude exports through the next decade. Rising US energy clout has frustrated efforts by OPEC to control global oil prices through a production curb. The unexpected supply surge pushed US oil prices down more than 5% this week to close at $50.49 (R650).
The price drop underscored the growing impact of US shale production on global supplies and prices relative to OPEC member nations, which once exercised dominant influence on global markets. OPEC secretary-general Mohammed Barkindo said this week that for the cartel to renew its production output agreement, non-OPEC members must be on board. –