By Michael Eboh
THE Organisation of Petroleum Exporting Countries, OPEC, has warned against a further decline in global crude oil and gas spend in 2017, stating that the industry cannot afford to see investment levels fall for a third year in a row.
Secretary-General of OPEC, Mr. Sanusi Barkindo, gave this warning in a presentation at the just concluded International Petroleum Week, titled: ‘‘The future economy of oil from the Middle East and across OPEC.” He disclosed that oil and gas exploration and production spending fell by over $300 billion in Nigeria and the rest of the world between 2015 and 2016.
According to Barkindo, global oil and gas exploration and production spending fell by around 26 per cent in 2015 and a further 22 per cent drop in 2016. He stated: “It was evident in the last quarter of 2016 that total OECD commercial oil stocks were falling, and it is expected that we will see a further drop during 2017, as a result of these decisions and developments. We will continue to focus on the level of inventory drawdown to bring the level closer to the five-year industry average.
“These decisions should also mean that prices stabilise at levels that are more conducive to the kind of investments the industry needs, specifically by lessening the financial and operational stresses for companies and reducing the pressure to cancel or postpone planned projects. We believe as the market rebalances the price will find its equilibrium.
“The gravity of the sharp contraction in oil industry investment is underscored in the fact that in both 2015 and 2016 we witnessed a dramatic rationalization of projects.”