Title: Future oil supply scenarios and required investment

Authors: A. Miremadi, I.A.H Ismail

Addresses: Organization of the Petroleum Exporting Countries (OPEC), Austria. ' Organization of the Petroleum Exporting Countries (OPEC), Austria

Abstract: The supply of oil, like any other commodity, is sensitive to price changes. However, movements in oil supply are dependent on other additional factors, the most important of which are the geology of the region and the fiscal and contractual regimes. Total world oil supply to meet the current demand is estimated at about 52 mb/d (excluding the former CPEs). Since non-OPEC production has plateaued and is expected to fall in the future, the additional future oil supplies must come from OPEC member countries. This conclusion is borne out if we examine the respective reserves and reserves-to-production ratio of OPEC and non-OPEC producers. Of the world|s total proven oil reserves of about 922 billion barrels (excluding the former CPEs), OPEC holds 84 per cent. The reserves-to-production ratio of OPEC member countries presently stands at more than 100 years, and with known reserves regularly being revised upwards. For the rest of the world, excluding the former CPEs, the ratio is only 16 years. During the 1990s, the largest growth in production capacity to meet the increasing demand is expected to come from OPEC member countries, particularly the Middle Eastern ones. Non-OPEC regions, such as North America and the Soviet Union, are expected to continue their decline. whereas the North Sea region will mature and start to fall at the end of the decade. The per barrel investment cost in capacity expansion in OPEC region, particularly in the Middle-East, is the lowest in the world to develop a new capacity and to main current output. This is in line with the present low level of production cost in the region. The application of enhanced recovery techniques to some of the mature fields in OPEC countries would not change the picture in general terms, and the impact of the new technology will be to further reduce the cost of oil production. In order to meet the increasing future oil demand, substantial additional investment, especially in the upstream sector, is required by OPEC member countries. To enhance the investment needed, OPEC producers must be able to predict the oil demand, which means that co-operation measures between all producers, oil companies, the consumers and their governments are urgently needed. The future pattern of energy requirements is expected to stimulate upstream exploratory and development activities as well as other development of infrastructures, such as pipelines in the gas and oil industries. The numerous accidents in recent years in energy production, transport, distribution, refining and conversion have confirmed the need to tighten the environmental regulations, and the need to increase investments in all the energy industries after a decade of under-investment, especially in the oil upstream.

Keywords: energy policy; environmental impact; futures; oil policy; oil prices; oil supply; oil demand; demand forecasting.

DOI: 10.1504/IJGEI.1994.063555

International Journal of Global Energy Issues, 1994 Vol.6 No.6, pp.325-341

Published online: 16 Jul 2014 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article