Crude oil production capacity is dwindling globally, and more investments in new production are needed urgently, Aramco's chief executive told Bloomberg.
"It's a huge concern," Amin Nasser said, adding that "If there's aviation pick up next year, that spare capacity will be depleted. It's now getting to a situation where there's limited supply -- whatever is left that's spare is declining rapidly."
The International Energy Agency defines spare oil production capacity as production that can be started within 30 days and sustained for at least 90 days. Aramco is already working on boosting its spare capacity to 13 million bpd over the next five years.
"We maintain 25-year production profiles for new projects. Our philosophy is to provide cleaner oil and gas for the long term. We are developing it for the long term, not the short term," Amin Nasser said earlier this month at the Energy Intelligence Forum, where he announced the capacity boost plan.
Bloomberg noted in its report that oil and gas traders have leveled criticism at governments and activist organizations for calling for an end to new oil and gas exploration, warning this would lead to an energy shortage during the next ten years.
Over the immediate term, however, there is no danger of shortages. In fact, most expect the market to swing into a surplus next year of about 1 million bpd by March 2022. This would compare to a deficit of 1.5 million bpd at the moment.
Just last week, a new report from the UN Environmental Program became the latest in a string of reports calling for the suspension of oil and gas drilling. According to one of the report's authors, "global coal, oil, and gas production must start declining immediately and steeply to be consistent with limiting long-term warming to 1.5°C."
By Charles Kennedy for Oilprice.com
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