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2018-03-26 07:55:00

$70: INSUFFICIENT FOR INVESTMENTS

$70: INSUFFICIENT FOR INVESTMENTS

BLOOMBERG - Oil's recovery to almost $70 a barrel hasn't been sufficient to stimulate the return of enough investment in the sector, according to Saudi Arabia's energy minister.

Investment is still $1 trillion below the level it was before oil's downturn in 2014, Khalid Al-Falih said in a Bloomberg Television interview in Washington Thursday. "That tells me that the pricing signals that have come out of the recovery have not been sufficient," he said.

The energy minister is in Washington as part of a three-week U.S. tour with Saudi Crown Prince Mohammed Bin Salman. Brent crude has risen almost 37 percent since November 2016, when OPEC and Russia led a coalition of 24 producers in output cuts aimed at clearing the supply glut unleashed by the U.S. shale-oil boom. Both OPEC and the International Energy Agency forecast that the production cuts will succeed in eliminating the oil-inventory surplus this year. The group saw record compliance with production-cut targets in February.

Al-Falih said the supply cuts have succeeded in trimming a global supply glut by two-thirds, but the rate at which inventories have been drawn down so far may not be sustainable at the same pace in 2018. "When exactly we will finish the job is not clear," he said.

Production at mature fields is slipping in countries including Mexico, Venezuela and China, which will help determine how fast the remaining supply overhang drains.

The price surge has also been a boon to the U.S. shale industry, helping boost American crude output to a record high. Government data show U.S. oil production has pushed past Saudi Arabia's and could reach 11 million barrels a day later this year. IEA Executive Director Fatih Birol has said "explosive growth" in U.S. oil output may extend beyond this year.

It's not clear whether shale's surprising 1-million-barrel-a-day growth last year will continue at the same rate, he said. Despite that increase, last year "still was accompanied with a significant stock draw."

OPEC and its allies are said to have held discussions about changing the way they measure the impact of their production cuts, amid concern that the current way of gauging success is flawed.

Collaboration among the OPEC and non-OPEC members won't stop once the market is in balance, according to Al-Falih.

"We'll be on together in 2019 and beyond," he said. "We will have a framework where we're always monitoring, always working together, and always ready to step in to adjust production to stabilize the market. It could be to cut, it could be to step in to increase production as the markets require. The idea is almost a permanent framework of the countries working together."

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Earlier:

 Investments
2018, March, 21, 12:30:00

OIL INVESTMENT THREAT

PLATTS - ExxonMobil remains more bullish on the future for oil, predicting that demand for oil will likely continue to grow by 19% to 117 million b/d to 2040.

 

 Investments
2018, March, 11, 11:35:00

GLOBAL TIGHT OIL INVESTMENT

EIA - Brent global benchmark crude oil price will increase throughout the projection period but will remain lower than prices during 2010–2014 in real dollar terms. For this reason, future investment growth in higher-cost resources is expected to be lower than in recent history. Global production of tight oil will increase by 3.3 million b/d, offshore deepwater by 2.7 million b/d, and oil sands by 1.4 million b/d between 2017 and 2040. Total production increases from these sources makes up nearly half of the long-term global liquids supply growth through 2040.

 

 Investments
2018, March, 11, 11:30:00

U.S. OIL INVESTMENT

REUTERS - “The stability in oil prices is a net positive. If energy companies can demonstrate to investors that they can generate cash flow in the current oil price environment, they can go public,” said Grant Kernaghan, Citigroup’s managing director of Canadian investment banking. “The recent volatility hasn’t resulted in markets shutting down,” he added, suggesting equity markets were still open despite a 10-session period up to Feb. 8 when the S&P 500 dropped over 10 percent.

 

 Investments
2018, March, 7, 14:25:00

OIL NEED $20 TLN

SAUDI ARAMCO - our industry needs more than 20 trillion dollars over the next quarter century to meet rising demand for oil and gas (including in ageing infrastructure).

 

 Investments
2018, February, 16, 23:20:00

ADNOC INVESTMENT $109 BLN

AOG - ADNOC announced that it has launched the implementation phase of its new in-country value (ICV) strategy, aimed at increasing the company’s ICV contribution and strengthening its relationship with the UAE’s private sector.

 

 Investments
2018, February, 5, 07:42:00

MEXICO'S OIL INVESTMENT $100 BLN

FT - Mexico secured almost $100bn in investment in its most successful oil tender to date as Anglo-Dutch oil major Royal Dutch Shell positioned itself as the biggest player in deepwater exploration and new companies including Qatar Petroleum burst on to the scene.

 

 Investments
2017, December, 13, 12:15:00

WBG: NO OIL&GAS FINANCE

WBG - The World Bank Group will no longer finance upstream oil and gas, after 2019.

 

Tags: OIL, PRICE, INVESTMENT