Saudi Arabian oil officials have been spreading the message far and wide: The OPEC kingpin sees no threat to its role as a preeminent global crude supplier from rising US shale gas and oil production. Still, one of its senior officials admitted this week in Dubai that global petrochemicals competition should serve as a wake-up call for GCC producers to rationalize and improve efficiency. The risk to future supply is for this apparent complacency to translate into scaled back investment in new capacity, as a new IMF report suggests.
While it is true that Saudi Arabia and its fellow OPEC producers may face a potential supply glut in the near- and medium-term as a result of the US shale gas and tight oil surge of the past two years, the outcome of this rapid development is unclear. Demand for OPEC oil may stagnate for a while, but much will depend on the sustainability of the US production boom, which faces infrastructural, regulatory and environmental constraints, the IMF said in a special report issued on 20 November, on the impact of unconventional oil and gas in North America on the GCC’s oil and gas producers. (CONTINUED - 1367 WORDS)