Crude oil prices could rise to $200 per barrel as international oil companies curb their investments in new exploration and production, the Nigerian National Oil Corporation said this week.
The effect of investment decisions being made now will be felt in about five years, NNPC's Group General Manager for National Petroleum Investment Management Services, Bala Wunti, said at the Nigeria International Petroleum Summit as quoted by This Day.
"I was talking to one of my senior colleagues yesterday, and he said, well, it is time for someone to speak the truth," Wunti told the summit. "If nothing is done and this trend continues, guys, we should be ready for a $200 per barrel of oil. The reason is simple, if you stop investing in the oil and gas sector, you can only produce what you have today."
The International Energy Agency recently called on the oil and gas industry to suspend all new exploration citing the Paris Agreement targets and the net-zero emissions of governments. However, oil demand has shown no relation whatsoever to emissions targets and has been recovering more strongly than either the IEA or almost any other forecaster expected.
Yet pressured by investors and by their own new agenda, many energy companies are squeezing their investments in new exploration anyway, relying on existing output only.
"And what you have today, in many instances in five years, it will start declining, that is, if you we are not already in a declining mode, because many in Nigeria are in declining mode," NNPC's Wunti explained.
"So, if there's no fresh capital for either brownfield or greenfield investment, we cannot grow production; if we don't grow the production, the consequence is that we're building a short supply for tomorrow. In basic economics, short supply means a higher price. So this is the world. This is the world that we see today and this has presented some very emergent trends."
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More