Total, the French Total, warns that the world could face a supply deficit of 10 million barrels per day (bpd) by 2025, due to continued underinvestment in industry, the OPEC pact + and the cracks in the American shale business model.
“There is a risk of a supply crisis in the medium term,” said Helle Kristoffersen, president, Total Strategy and Innovation, at the company’s earnings call during the fourth quarter of this week.
“We have seen in 2020 how OPEC managed to regain market discipline. We have seen the cracks in the American shale model and we have seen a continuation of underinvestment in the oil industry in general,” Kristoffersen said.
The market needs new oil projects, given the fact that many oil-producing fields will see natural falls in production, the executive said.
“And that’s true, even if you have a very cautious view of the recovery in short-term demand and on future demand levels,” added Kristoffersen, who noted that a “10 million barrel gap for day between supply and 2025, is a massive supply shortfall to be covered in a few years. “
Last year, the coronavirus accelerated a structural fall in oil investments upstream, as all E&P companies, large oil companies, U.S. slate producers and domestic oil companies cut capital spending afterward. of falling prices.
Investments in new oil supply have been reduced to a minimum of more than a decade.
Currently, OPEC + has a lot of spare capacity that could come into operation when demand recovers. But sustained investment in oil and gas will be needed to meet global oil consumption, which the world will continue to need, with or without maximum demand, analysts and forecasts warn.
“The world may be dozing off in a supply crisis, albeit beyond 2021. A recovery in oil demand to more than 100 million barrels per day by the end of 2022 increases the risk of a supply gap of material at the end of this decade, causing an upward price increase. ” says Simon Flowers, president and chief analyst at Wood Mackenzie.
By Tsvetana Paraskova for Oilprice.com
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