BAKU, Azerbaijan, Nov.3
By Leman Zeynalova – Trend:
The oil and gas sector will need new investments worth trillions of dollars for coming years, Cyril Widdershoven, a Middle East geopolitical specialist and energy analyst, a partner at Dutch risk consultancy VEROCY, and Global Head Strategy Risk at Berry Commodities told Trend.
“The ongoing investment crunch on oil and gas worldwide is worrying, as it not only constraints future oil/gas production, but also impacts overall production capabilities at present. Research, such as of the International Energy Forum (IEF), shows that there has been capex underinvestment of more than 25 percent the last years. The latter still is expected the next years, as major international oil companies (IOCs) and independents are not yet out of the crosshairs,” he said.
Widdershoven noted that the main threat is coming from investors and politicians, as both are focusing on divestments or stating openly not to be willing anymore to invest in hydrocarbons.
“The need for new investments is hitting trillions of dollars for the coming years. If not being put in place very soon, overall decline in large scale oil and gas producing regions will be around 8-9 percent per year. To counter decline already a multibillion investment is needed. Look at Aramco, has put in place a major investment plan, not only to keep production at the same level, but also to increase production to 13 million bpd. By pushing for further divestment of oil and gas production assets of the likes of Shell or Total, non-OPEC production is being hit severely. At the same time, the availability of financial resources to other independents is being constrained, while non-Western production in non-OPEC is also hit very hard,” said the expert.
He noted that If demand for hydrocarbons worldwide however will increase still, as most reports now are indicating, a supply crunch is building up, which will lead to upward prices. Possible price ranges now for 2021-2022 would be around 100-110 per barrel, but a crisis somewhere, or Iran action, will have severe price spike potential.
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