The majority of those attending the various conference sessions of the Seatrade Offshore Marine Workboats Middle East event concurred that oil prices were likely to lie in the $50-60 range until at least the end of next year. Topaz Marine boss Rene Kofod-Olsen went further, predicting that they would likely lie in this range until the end of the decade.
However, Fazelboy has a number of arguments indicating that “lower for longer” could well prove wrong as far as oil prices go. First, he says, from a peak E&P spend of some $650bn in 2013, it rose by just 2% last year but will plunge by a likely 15% this year and probably 15-20% in 2016. Two, global oil reserves are being depleted by between 8-10% per annum – about 8m barrels per day (bpd) – and these cuts are having a serious impact on new finds.
Three, more than 250,000 jobs have already been lost, not just in E&P but also in the energy services sector, so there may be future pressure on human resources. And finally, it takes 3-5 years to bring a new offshore oilfield on stream, longer in certain areas where the “four d’s” apply – deeper, distant, difficult, dangerous.
Fazelboy does not hold truck with other sources filling the gap. US shale oil could reach 4-5m bpd, he concedes, and Iran might pump another 2m bpd within the next two years. But even combined, these would not be sufficient to make up a shortfall resulting from the cuts in E&P spending. Add to that economic growth in the US and Europe, and continuing demand increases in Asia.
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