This week’s Arab Petroleum Investment Corporation (APICORP) symposium in Kuwait City highlighted the lively debate in the industry as to the repercussions of shale oil and gas on the region. Roberto Sieber, chief economist and global head of market analysis at Hess Energy Trading (HETCO) says that global crude production boosts will see limits ahead: “Let’s face it – the world, other than the core four OPEC countries [Saudi Arabia, Kuwait, UAE and Iran] is producing at capacity.” Oil production growth outside these core OPEC countries has seen two major trends since 2000. In the first half of that period, the former Soviet Union (FSU) was the major contributor to production growth – “but the FSU was harvesting low-hanging fruit, and this will not be repeated,” says Mr Sieber. That period was followed by the shale revolution in North America. If you exclude the FSU, North America and the core four OPEC countries, though, production has actually contracted globally over the past 4-5 years. Why?
Mr Sieber says that major studies point to decline in existing fields as the main cause, with most indicating a 4-8% per year natural decline in global production. This translates to about 3mn b/d per year lost due to declines: “The overwhelming part of investment in the oil industry is just to stand still.” (CONTINUED - 1380 WORDS)