BREAKING NEWS, Business
–
The International Oil Agency says investment cuts in oil and gas industry globally will lead to further oil security surprises
THE International Energy Agency, IEA, has predicted that there will be another round of oil bust as decline in the price of crude oil affected investments in the oil and gas industry globally. According to the latest report of the Paris based IEA, historic investment cuts taking place now increase the possibility of oil-security surprises in the “not-too-distant” future.
Neil Atkinson, head of the IEA’s Oil Industry and Markets Division, explained that about $300 billion was needed to sustain the current level of production, and nations including the U.S., Canada, Brazil, and Mexico are facing difficulty in keeping up investments.
“We need a lot of investments just to stand still, here’s danger as we are reaching a point where we are barely investing upstream. If investment doesn’t resume in 2017 and 2018, we can see a spike in oil prices as oil supply can’t meet demand,” he said.
Companies such as ConocoPhillips, Chevron Corp. and BP Plc have canceled more than $100 billion in investments, sacked tens of thousands of workers, slashed dividends and sold assets as oil sank below $30 a barrel to a 12-year low.
With crude rebounding since mid-February to near $41, Atkinson said the worst may be over for prices as they have a floor “for the time being.”
The Organisation of the Petroleum Exporting Countries, OPEC, and other producers including Russia plan to meet in Doha next month to discuss limiting output to reduce a global oversupply.
“The meeting may or may not take place. It’s seen as a gesture to show that there is stability and the impact it will have on actual supply structure will be none whatsoever,” said Atkinson, who expects oil prices to average $35 to $40 a barrel this year.
“You need to invest large sums of money just to maintain existing production and if you want to grow production to meet the demand growth that we’re expecting, that money has to come from somewhere and we’re seeing big cuts.
“There will be “barely any supply to meet demand” if investments don’t resume in the next one or two years. Apart from Saudi Arabia and one or two other Gulf state nations, there is little spare capacity around the world. Further ahead, Venezuela’s economic problems may lead to social and political unrest and the potential for supply disruptions in Libya remains a risk,” he argued. Vanguard
— Mar. 29, 2016 @ 9:00 GMT
|
Tags:
