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UK supermajor BP doesn’t expect global oil supply shortages in the coming years because of reduced investment, Brian Gilvary, BP’s Group Chief Financial Officer, said on Thursday.
“We’re not seeing under-investment coming through yet,” Gilvary said at the FT Energy Transition Strategies summit in London, as quoted by Reuters.
“If we start seeing a drop off in production in the Lower 48 [U.S. shale] that might be a cause of concern,” Gilvary said at the summit.
Earlier this year, Saudi Aramco’s president and chief executive Amin Nasser said that the industry would need to invest more in exploration, after record-low discoveries last year. Oil firms will have to meet not only growing energy demand but will have to offset with new discoveries a large natural decline in mature oil fields, Aramco’s top executive said in Houston in March.
According to Nasser, the industry—which has already lost US$1 trillion in investments during the downturn—needs more than US$20 trillion over the next 25 years to meet rising demand for oil and gas.
More recently, higher oil prices and lowered development and project costs have led to cautious optimism and measured risk-taking within the industry that is set to see an uptick in global oil investment this year, energy consultants Wood Mackenzie say.
While much of the investment increase is happening in U.S. onshore—with shale companies lifting 2018 budgets by 15-20 percent in response to higher prices—conventional oil project investments around the world are also coming back, especially in top offshore areas where project economics are competitive with U.S. tight oil, says Simon Flowers, Wood Mackenzie’s Chairman and Chief Analyst.
For offshore developments, Norway is leading the pack, Rystad Energy analysts said earlier this year. Norway was the largest contributor to offshore developments in 2017 with US$18 billion worth of projects, followed by the United States and Mozambique, the analysts noted.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.