‘The dark days are over for oil in­dus­try’

OPEC lead­ers op­ti­mistic about fu­ture of sec­tor at sum­mit in Abu Dhabi

7 Days in Dubai - - FRONT PAGE - By Ma­hak Man­nan @Ma­hakLFC

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.

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