By Staff writer
Suhail Al Mazrouei speaks out says drop in spending could trigger ‘prolonged, soaring crude prices’
The $300 billion (AED1.1 trillion) decline in investments for the development of oil and gas resources could trigger an increase in crude prices, government officials and industry experts have warned.
Addressing the Abu Dhabi International Petroleum Exhibition and Conference on Monday, Suhail Al Mazrouei, UAE Minister of Energy said falling energy-industry investment could trigger “prolonged, soaring crude prices.”
“It has been seen that a significant level of investment has come down since we started this downturn. For us members of OPEC and many countries and companies that is a source of worry today. Can we catch up? Yes. It is everybody’s problem. We can’t afford to see a hike that stays for long,” he said, calling stakeholders, countries and companies to address the issue.
OPEC Secretary-General Mohammad Barkindo said global energy spending is down $300 billion in the past two years and could fall for the third year in a row.
“Spending on global gas and oil exploration and production fell by 26 percent last year and is expected to fall by a further 22 per cent this year,” The National quoted him as saying.
“If market and financial conditions do not improve there is the distinct possibility that we will see a third year of investments shrinking. To put this into some oil industry context, there has never been a consecutive three-year decline in its history,” said Barkindo.
Nearly $10 trillion in investment is needed by 2040 to meet future oil and gas demand, he said.
OPEC’s global oil outlook expects demand to increase to over 109 million barrels of oil per day (bpd) by 2040 from 93 million bpd in 2015 with oil and gas continuing to contribute 53 percent to the global energy mix by 2040.
Sultan Al Jaber, the UAE Minister of State and the chief executive of Abu Dhabi National Oil Company (Adnoc), said that the UAE is forging ahead with investments, diversifying its product range and targeting new markets, with a focus on Asia.
“We will diversify our portfolio of products and open new markets to ensure long-term and sustained profitability,” he said.
Last week, Adnoc announced plans to scale up its oil production target by 400,000 barrels per day to 3.5 million bpd in 2018 as part of its 2030 strategy.