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The global oil industry needs to find “another Iraq or North Sea every year” to plug the shortfall of oil supply as demand continues to grow, Majid Jafar, the chief executive of the UAE-based Crescent Petroleum, told CNBC on Thursday.
According to the oil executive, the industry continues to see underinvestment as spending on exploration and new projects has not recovered enough from the recent downturn.
“The big message here has been the industry is not investing enough. Investment is down 50 percent from where it was three or four years ago and hasn’t really recovered,” Jafar told CNBC on the sidelines of an OPEC conference attended by many oil industry executives.
“Actually, what we have seen in this meeting is we need to add another Iraq or North Sea every year and it is not clear where it is coming from,” Crescent Petroleum’s chief executive noted.
Currently, the global oil industry has an image problem, with the majority of the public thinking that it’s a dying industry and “not important anymore,” Jafar said, but added that oil and gas still meets 60 percent of global energy output, compared to the 3-percent share met by renewables.
Earlier this month, BP’s Group Chief Financial Officer, Brian Gilvary, said that “We’re not seeing under-investment coming through yet.”
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In March, Saudi Aramco’s president and chief executive Amin Nasser warned that the industry would need to invest more in exploration, after record-low discoveries last year.
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.
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.