Total sees potential 40 million b/d oil supply gap by 2020
Dubai (Platts)--18Sep2012/819 am EDT/1219 GMT
The world faces a potential supply challenge for both oil and gas in the
coming two decades and will need to put an additional 40 million b/d of new
oil on markets by 2020, a senior Total executive said Tuesday.
Jean-Luc Guiziou, president of Total in the UAE, told CWC's NOC &
Governments Summit in Dubai, that while a relatively stable oil price
environment was good for investors, sustained "firm oil prices" had pushed
markets into backwardation and, combined with a weaker euro, had led to the
highest ever gasoline price in countries like France while placing an economic
burden on other countries in Europe, already suffering from debt issues.
"This situation creates tensions in regions like Europe, where the
economies are struggling," Guiziou said.
"Currently, the cost of energy is becoming a burden on the economic
development of the countries of the region," he said.
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At the same time, markets faced conflicting issues of rising supply from
some areas but geopolitical tensions on the other, which he said was causing
uncertainty and affecting the price structure.
"On the one hand, we have good news on the supply side. We are seeing the
booming development of oil and gas in North America and good news of
discoveries in frontier exploration provinces," Guiziou said, referring to
areas such as East Africa and offshore Brazil.
"At the same time, we see geopolitical issues and events which provide a
constant threat to the ability of our industry to supply the markets in a
smooth way," Guiziou said, adding that this was evident in the backwardation
that has been a feature of the oil market for some time.
"Total's view is that of a world which will remain facing undersupply
challenges in the mid- and long-terms," Guiziou said.
"Despite the good news on the supply side, we need to remember that we
have as an industry to put on the market by 2020 about 40 million b/d of new
oil, which is a huge number, and obviously those 40 million b/d will replace
oil from mature fields. It's within a short time frame so a lot of challenges
will be faced by our industry."
He said that the same applied to the gas market.
"We see before the end of the decade a shortage of supply on the European
and Asian markets," he said.
This will require the industry to proceed with "very intensive capital
allocations and expenses to develop new facilities and put that new oil and
gas on the market," which Guiziou said was a joint responsibility of both the
international oil companies and the state-owned resource holders.
--Kate Dourian, firstname.lastname@example.org
--Edited by Maurice Geller, email@example.com