Opec urges oil firms to boost investment
new delhi — Opec SecretaryGeneral Mohammed Barkindo on Tuesday urged oil producing companies to increase capacities and invest more to meet future demand as spare oil capacity shrinks worldwide.
Oil prices have rallied this year on expectations that US sanctions on Iran will strain supplies by lowering shipments from Opec’s third-largest oil producer. Brent crude breached four year highs to reach $86.74 a barrel earlier this month, the highest since 2014.
“Countries that are holding spare capacity are now shrinking because there has been less investment in exploration,” Barkindo said on the sidelines of the IHS CERA conference.
The global oil sector needs about $11 trillion in investment to meet future oil needs in the period up to 2040, Barkindo said, adding that import-dependent countries such as India were concerned about future oil supply.
Crude oil demand is expected to increase by 14.5 million barrels per day (bpd) from 2017 to 111.7 million bpd in 2040, Opec said in its September report.
Saudi Arabia, the de facto leader of Opec, is the only oil producer with significant spare capacity on hand to supply the market if needed, and the kingdom plans to invest $20 billion in the next few years to possibly expand its spare oil production capacity.
Barkindo said the oil markets were currently adequately supplied and balanced, but cautioned against a potential imbalance in 2019 due to higher supply.
“We will continue to ensure that the balance that we have attained after four years will be sustained going forward,” he said.
Members of Opec and nonOpec countries participating in a supply-reduction agreement are on course to reach 100 per cent compliance, Barkindo said, calling it a “work in progress.”