Steep falls in oil production means the world now needed to replace an amount of oil output equivalent to Saudi Arabia’s production every two years, Merrill Lynch said in a research report.
Non-OPEC crude oil production may have already peaked and international oil companies faced the prospect of both younger and older oil fields declining steeply, the firm said in the report released on Wednesday.
It said the cumulative decline of global oil production from today could amount to 30 million barrels per day by 2015.
“As a result of these steep decline rates, the world now needs to replace an amount of oil production equivalent to Saudi Arabia’s production every two years,” said Francisco Blanch, head of global commodities research at Merrill Lynch.
The International Energy Agency expects an increase in non-OPEC output of 51 million barrels per day over the next seven years, the firm said, while it saw production in the range of 49 million to 50 million barrels a day in the same period.
But it said should the credit crunch push decline rates to six percent, non-OPEC production could decline precipitously towards 47 million barrels per day by 2015 from current levels.
It said oil production decline rates were a function of investment rates, as well as the size and age of oil fields. “All these factors point to steeper oil output declines going forward,” said Blanch.
Merrill Lynch said the combined declines in OPEC and non-OPEC countries alike could lead to pressure for higher oil prices as soon as 2010 or 2011, assuming the economic slowdown did not turn into a multi-year event where global oil demand was pushed down structurally for the next five years.
Saudi Arabia, the world’s largest oil exporter, said last month it will take the lead among OPEC members in trying to halt a six-month slide in prices.