Published — Tuesday 26 August 2014
Last update 26 August 2014 12:53 pm
Aramco sees more capital going into offshore projects and expects rising costs across the oil sector to underpin oil prices, Al-Falih told a conference in Stavanger, Norway.
Oil prices fell to a 14-month low of $101.07 last week as global demand growth weakens, even as production ramp ups in several places create a glut of oil.
“To meet forecast demand growth and offset (global output)decline, our industry will need to add close to 40 million barrels per day of new capacity in the next two decades,” Al-Falih said.
“Although our investments will span the value chain, the bulk will be in upstream, and increasingly from offshore, with the aim of maintaining our maximum sustained oil production capacity at 12 million barrels per day, while also doubling our gas production.”
Al-Falih said that the Organization of the Petroleum Exporting Countries or the International Energy Agency should not try to control oil prices but fundamental problems within the industry, like rising costs, increasing technical challenges and the falling size of finds would support the price.
“I share … the belief that this is a market driven business, it’s not OPEC, the IEA, and consumers that should be in the business of trying to control the market,” Al-Falih said. “OPEC will take the price as it comes.”
“To tap these increasingly expensive oil resources, oil prices will need to be healthy enough to attract needed investments … (and) long-term prices will be underpinned by more expensive marginal barrels.
Speaking at the Offshore Northern Seas Conference, Al-Falih also said the industry was experiencing critical manpower shortages.
“Finding and attracting competent engineers, rig personnel and geoscientists to run ever more complex and expensive operations has become an acute challenge,” he said.