During a visit to London (UK) yesterday, Secretary General of the Organization of Petroleum Exporting Countries (OPEC) said: “Prices in USD 45-55 a barrel threshold and I think it has hit bottom. Price will soon only to rise again. “Typically, this type of assessment is not noticeable, but this time it was concerned by the leadership from the highest OPEC.
However, Abdullah did not say whether OPEC will intervene and save the oil market. Instead, he said that markets are self-stabilizing signs as companies cut spending, making the supply goes down.
Moreover, the number of rigs in the United States is also significantly reduced. This is considered a key factor for oil prices bottomed out. However, in the context of the oil sector growth by reducing the current oversupply, Abdullah warned would reduce investment risk to oil supplies in the future.
OPEC Secretary General – Abdullah al-Badri. Photo: Washington Times
“If you do not invest in oil and gas, oil prices exceeded 200 USD per barrel in the future,” Mr Abdullah said. Though not given a specific time period, OPEC Secretary General also said that this is the relationship between investment and production in the future. Because oil production will fall naturally and the oil companies need to invest in new production, not only to compensate for reduced supply of old oil fields but also to meet the growing demand. However, the oil companies rather reluctant to invest in new production while reducing cash flow.
Over time, this will be a worrying problem because the oil reserves around the world will fall an average of 5% per year. To overcome this decline, the oil companies to increase supply by about 200 billion barrels in the next 15 years just to meet market demand.
This should supply 7000-10000 billion investments. However, when companies are claiming expenses decreased this year, the market will be difficult to meet future supply. In fact, as oil prices fell, the number of projects with a total value of up to $ 150 billion will be delayed this year. But even without delay, many of these projects will not have products in the next few years due to the construction period lasted.
Typically, at the end of last year, new Chevron delivered the first barrels of the two projects began in 2001 in the Gulf of Mexico. Meanwhile, a project worth $ 6 billion other new companies were suspended last year will not produce oil until 2018. The major projects delayed oil prices will rise in the future, while tightening existing investment will make the supply drop.
OPEC Secretary-General is calling lows for oil prices. Although not the first to do this, but the first place OPEC, Abdullah’s comments rather have weight.
However, according to CNN, this can also be a part of OPEC plans. They are intended to push oil prices down to future market share when oil prices rise. OPEC ready to suffer in the short term to long-term profitability large.