Global oil supply will be enough to meet demand in the short and medium term, but the world is headed towards a supply shortage after 2026 unless the oil industry boosts investment in new projects, participants at last week’s Energy Intelligence Forum 2021 said.
In the immediate future and in the next few years, global oil supply will be adequate to meet demand, because of the available spare capacity which the OPEC+ group is currently idling in their deal and the supply expected to come from already sanctioned new projects, according to most of the industry professionals who took part in the forum.
However, after the mid-2020s, the world will need either more new supply to meet growing demand or a reduction in demand if it is to stave off a supply crisis, industry officials and analysts said.
Some of those officials have already started to call for more investment in new supply, considering the long lead times in conventional projects from discovery to production.
For example, Patrick Pouyanné, chief executive at France’s TotalEnergies, said at the Energy Intelligence Forum that oil prices would “rocket to the roof” by 2030 if the industry were to stop investments in new supply, as some scenarios for net-zero by 2050 suggest.
“If we stop investing in 2020, we leave all these resources in the ground ... and then the price will rocket to the roof. And even in developed countries it will be a big issue,” Pouyanné said at the forum, as carried by Energy Intelligence.
Global annual upstream spending needs to increase by as much as 54 percent to $542 billion if the oil market is to avert the next supply shortage shock, Moody’s said last week.
“Our analysis demonstrates that upstream companies will need to increase their spending considerably for the medium term to fully replace reserves and avoid declines in future production,” Moody’s Vice President Sajjad Alam said.