The Organization of Petroleum Exporting Countries said the group’s varying spare capacity is set to double in 4 years when it will reach 8 million b/d.
“In 2010, OPEC’s spare capacity stood at more than 5 million b/d,” OPEC said in its most recent World Oil Outlook. “While this capacity fell to about 4 million b/d during the second and third quarter of 2011…it is expected to stabilize at about 8 million b/d over the medium term.”
The report continued, “Regardless of all the challenges and uncertainties, OPEC member countries continue to invest in additional capacities.”
OPEC said its member states plan some 132 projects for 2011-15 and that exploration and production plans for that period could translate into an investment figure of close to $300 billion should all projects be realized.
OPEC said its member states must invest “an average of $30 billion annually over the medium term, rising towards $40 billion/year in the long term” to fulfill market needs for the additional capacity.
Through the $300 billion is almost twice as much as the $155 billion worth of projects OPEC forecast over 5 years in its previous report in 2010, it pointed out that the spending forecasts could be adversely affected by the policies of consumers.
“The energy and environmental policies of consuming countries…offer a hazy picture of their impact on future oil consumption, supply levels and overall energy demand,” said OPEC Sec.-Gen. Abdullah El-Badri.
OPEC has often said that carrying spare capacity represents huge financial risk, a point it stressed again in this year’s report.
In a scenario examining a more rapid shift to hybrids and electric cars, OPEC said world demand by 2035 would reach about 102 million b/d, curbing the need for extra supplies from the group.
“By 2035, the amount of OPEC crude needed will be less than current levels” under that scenario, the report said. “This means that OPEC upstream investment requirements are subject to huge uncertainties.”
El Badri said, “Confidence is key,” adding, “It would be a damaging waste of resources to invest in capacity that is not needed.”
The OPEC figures on increased spare capacity are in line with predictions made by the International Monetary Fund in a report issued earlier this month.
IMF said global production capacity is expected to rise by 6.8 million b/d by 2016, with about 2.6 million b/d of the capacity increase expected to come from non-OPEC countries.
“The remainder of the capacity expansion [of 4.2 million b/d] is expected to come from OPEC producers, with the largest share coming from Iraq as oil facilities continue to come back online,” it said (OGJ Online, Nov. 1, 2011).
Last month, a report by Deloitte Middle East estimated that national oil companies in the Middle East and North Africa will invest $140 billion in the oil and gas sector this year, with more to follow in coming years.
“The Iraqi opportunity itself is lucrative with the government expected to award EPC contracts worth more than $130 billion over the course of the next few years,” the report said (OGJ Online, Oct. 25, 2011).
Contact Eric Watkins at [email protected].
