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Oil Majors Dive Into Deepwater Projects Despite Tight Budgets

Oil Majors Dive Into Deepwater Projects Despite Tight Budgets

Despite tightened budgets, frontier drilling…

Shell, Aramco: There’s No Quick Fix For Tight Oil Market

Spare oil capacity throughout the world is very low, and significant investments in the oil industry are not on the immediate horizon—not even with higher prices—Shell’s and Aramco’s heads said on Tuesday, according to Reuters.

According to Aramco’s Chief Executive Amin Nasser, who spoke at the Energy Intelligence Forum on Tuesday, the oil markets are “focusing on what will happen to demand if recession happens in different parts of the world. They are not focusing on supply fundamentals.”

While the market focuses on the possible effects from a global recession, it would take decades for investments in oil and gas projects to start to bear fruit—even at today’s high oil prices.

“You cannot have a quick response to the market signals we are seeing today,” Shell’s CEO Ben van Beurden said at the same energy conference on Tuesday. Shell reiterated its overall plans were to make the shift away from oil and gas. “We cannot live in this world without spare capacity,” van Beurden said, adding that if he had $1 billion to spend, he would invest in the “energy system of the future”.

Oil prices have risen in 2022, with WTI now $10 higher than it was at the beginning of the year, and Brent now $12 higher. While oil prices have risen, investments in oil and gas companies have reported little change in the amount of investments in the industry.

Meanwhile, oil and gas companies are having to pay more to obtain what it takes to produce more oil and gas, according to the most recent survey by the Dallas Fed, as inflation failed to spare the industry. In the survey, 85% of the 144 surveyed companies said that the market is heading to significant tightening over the next two years.

By Julianne Geiger for Oilprice.com

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