‘The dark days are over for oil industry’
OPEC leaders optimistic about future of sector at summit in Abu Dhabi
The international oil market has seen the worst of the slump and will emerge more efficient than in the past, the annual Abu Dhabi International Petroleum Exhibition & Conference has heard.
OPEC Secretary-General Mohammad Sanusi Barkindo made the comments as leaders from across the globe met to discuss the ongoing challenges facing the industry.
But he warned that unprecedented cuts to global oil and gas exploration amounting to $300 billion in the past two years could put the recovery at risk.
Oil now sits under $50 per barrel – an improvement on the dramatic $26 low seen in January but still significantly down on $100-plus in mid-2014.
Barkindo told the audience: “Global oil demand is expected to increase from around 93 million barrels a day in 2015 to more than 109 million barrels a day by 2040. In fact oil and gas are still expected to contribute 53 per cent to the global energy mix by 2040.
“There are many reasons to prove we have passed the bottom of this vicious cycle and the future looks optimistic.”
He said, however, that this would require “huge investments” of $10 trillion for oil and $6 trillion for gas by 2040.
Barkindo added: “Global oil and gas exploration and production spending fell by around 26 per cent in 2015 and a 22 per cent drop is anticipated this year. Combined, this equals to more than $300 billion.”
OPEC chief Mohammad Sanusi Barkindo added: “If markets and financial conditions don’t improve, there is a distinct possibility that we could see a third year of investment cutbacks – and there has never been a consecutive three-year decline in its history. “This is a major concern for an industry that needs regular and predictable investments to provide necessary supply in the long term.” Also among the key speakers was Suhail Mohammed Al Mazrouei, the UAE Minister of Energy, who said that “this industry has proved in the past two years that is very resilient and we have survived the bottom of the crises”. He said: “Every company in the UAE has used this time to become more efficient... we are smarter now and are able to produce the same amount of oil at half the price of what we did before.” He said low oil prices have had a significant impact. He added: “A significant number of projects in place were getting delayed, significant level of investment in the industry has gone down and in this situation we cannot be stagnant and say it is not our problem. We need stability.” The conference at ADNEC continues until tomorrow.