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A lack of investment in energy projects due to the sustained drop in oil prices since 2014 means the market is storing up an oil price shock for the future, according to speakers at the 17th International Oil summit in Paris on 21 April.
The natural decline in oil reserves and the drop in industry investment from $700bn in 2014 to a projected $400bn in 2016 means that “we are preparing a shock,” says Patrick Pouyanné, CEO of French oil major Total. A simulation by Total assuming a rate of natural decline of 5% and demand growth of 1%, both of which Mr Pouyanné described as “conservative,” found that there will be a 7mn b/d shortfall in supply by 2020 if current depressed investment trends continue.
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