01 April 2009
KUWAIT: Deficiency of available credit, plummeting oil prices and forecasts for investment shortages of some $12 trillion in the oil and gas sector in the coming 20 years were identified by energy experts as some of the challenges in the energy field. This information came during a two-day energy forum which focused on enhancing global energy security. The forum was organized in part by the International Energy Forum and the Government of Kuwait. Addressing the press upon the conclusion of the forum yesterday, Neo van Hulst, General Secretary of the International Energy Forum, stressed the importance of adequate investment in the oil and gas sector despite the volatile changes and challenges that the sector faces.
Hulst's statements were made during a press conference held at the JW Marriot yesterday. "Timely and accurate investments along the entire supply chain is vital for the efficiency and sustainability of energy markets," Hulst said. He went on to add that in order to keep the stability of the energy market, the recent estimates indicated a need of investment of approximately $12 trillion in the oil and gas sector in the coming 20 years. "This staggering amount of investment is needed even in the context of the recent fall of oil prices and the restricted availability of credit," he said.
The forum dwelled on three main areas that Hulst identified as: market uncertainty and an increase in oil price volatility, ensuring adequate investments in an uncertain environment and finding elaborate ways for cooperation between National Oil Companies (NOC) and International Oil Companies (IOC).
In his words, the forum's participants observed a recovery of the world economy and growth in oil demand. In his words, participants at the event advocated to maintain investment plans as much as possible to go within the decline of production through existing fields and to face future demand which will rise.
According to him, participants noted that since 2005, the cost of exploration and production has more than doubled due in part to the increase of commodity prices, the shortage of industrial capacity and the lack of skilled personnel. "If companies succumb to the economic pressure and reduce the amount of money it pays for hiring and training employees, there is a serious risk that it may sow the seeds of another crisis that will follow," he said.
Another point that the forum focused on was market uncertainty and the volatility of oil prices. "The participants acknowledge that the extreme oil price volatility over the past year is detrimental to both consumer and producers because it intensifies uncertainties on project planning and investment decision-making," Hulst stressed.
Moreover, participants noted that the present oil price levels, in combination with the current credit crunch, pose a serious threat to the needed investment in the oil sector as well as alternative energies. In his words, industry leaders at the event also highlighted that unpredictable energy policy frameworks contribute to business uncertainty and have an adverse effect on the viability of hydrocarbon technology projects.
Lastly, the forum discussed inventive ways for cooperation between national oil companies and international oil companies. "The NOC-IOC extended partnership is not a choice, but a necessity. The participants observed that the current estimates show that the bulk of the projected increase in the output of oil and gas will come from NOCs," he said, elaborating that NOCs and IOCs will need to develop innovative ways that go beyond the conventional approach.
The current oil price environment could be a catalyst for the formation of new joint ventures and efforts between companies. In conclusion, he remarked that the forum was an important step towards a global energy dialogue.
The forum, which was hosted and sponsored by Kuwait Petroleum Corporation, witnessed participants from national and international oil companies, representatives from producing and consuming countries as well as service companies from the financial sector. The forum aimed to promote discussions and understanding of key issues facing the oil industry (NOCs and IOCs) in volatile and uncertain times.
KUWAIT: Deficiency of available credit, plummeting oil prices and forecasts for investment shortages of some $12 trillion in the oil and gas sector in the coming 20 years were identified by energy experts as some of the challenges in the energy field. This information came during a two-day energy forum which focused on enhancing global energy security. The forum was organized in part by the International Energy Forum and the Government of Kuwait. Addressing the press upon the conclusion of the forum yesterday, Neo van Hulst, General Secretary of the International Energy Forum, stressed the importance of adequate investment in the oil and gas sector despite the volatile changes and challenges that the sector faces.
Hulst's statements were made during a press conference held at the JW Marriot yesterday. "Timely and accurate investments along the entire supply chain is vital for the efficiency and sustainability of energy markets," Hulst said. He went on to add that in order to keep the stability of the energy market, the recent estimates indicated a need of investment of approximately $12 trillion in the oil and gas sector in the coming 20 years. "This staggering amount of investment is needed even in the context of the recent fall of oil prices and the restricted availability of credit," he said.
The forum dwelled on three main areas that Hulst identified as: market uncertainty and an increase in oil price volatility, ensuring adequate investments in an uncertain environment and finding elaborate ways for cooperation between National Oil Companies (NOC) and International Oil Companies (IOC).
In his words, the forum's participants observed a recovery of the world economy and growth in oil demand. In his words, participants at the event advocated to maintain investment plans as much as possible to go within the decline of production through existing fields and to face future demand which will rise.
According to him, participants noted that since 2005, the cost of exploration and production has more than doubled due in part to the increase of commodity prices, the shortage of industrial capacity and the lack of skilled personnel. "If companies succumb to the economic pressure and reduce the amount of money it pays for hiring and training employees, there is a serious risk that it may sow the seeds of another crisis that will follow," he said.
Another point that the forum focused on was market uncertainty and the volatility of oil prices. "The participants acknowledge that the extreme oil price volatility over the past year is detrimental to both consumer and producers because it intensifies uncertainties on project planning and investment decision-making," Hulst stressed.
Moreover, participants noted that the present oil price levels, in combination with the current credit crunch, pose a serious threat to the needed investment in the oil sector as well as alternative energies. In his words, industry leaders at the event also highlighted that unpredictable energy policy frameworks contribute to business uncertainty and have an adverse effect on the viability of hydrocarbon technology projects.
Lastly, the forum discussed inventive ways for cooperation between national oil companies and international oil companies. "The NOC-IOC extended partnership is not a choice, but a necessity. The participants observed that the current estimates show that the bulk of the projected increase in the output of oil and gas will come from NOCs," he said, elaborating that NOCs and IOCs will need to develop innovative ways that go beyond the conventional approach.
The current oil price environment could be a catalyst for the formation of new joint ventures and efforts between companies. In conclusion, he remarked that the forum was an important step towards a global energy dialogue.
The forum, which was hosted and sponsored by Kuwait Petroleum Corporation, witnessed participants from national and international oil companies, representatives from producing and consuming countries as well as service companies from the financial sector. The forum aimed to promote discussions and understanding of key issues facing the oil industry (NOCs and IOCs) in volatile and uncertain times.
By Hussain Al-Qatari
© Kuwait Times 2009
