El Badri, OPECMembers of the Organisation of Petroleum Exporting Countries (OPEC) are expected to expend $8 trillion as crude oil investment requirements between 2012 and 2035.

However, OPEC is on the verge of losing eight per cent of its oil market share in the next five years with the stronger impact of shale and other alternative energy sources in the market.

According to the cartel in its 2013 Oil Outlook released at the weekend, between now and 2035, upstream investment requirements, based upon Reference Case volumes, as well as the need to invest to compensate for natural declines, are estimated at more than $5 trillion.

Nigeria has also recorded some milestone when it comes to oil and gas investment.

For instance, the Onne oil and gas free zone has recorded investments of over N659 billion while the country’s downstream investment in the last two years is over N1.6 trillion.

The report signed by OPEC’s Secretary-General, Abdalla Salem El-Badri, added that global refining investments are estimated at around $1.5 trillion, out of which $280 billion are needed for investment in existing projects, $370 billion for required additions and around $800 billion for maintenance and replacement.

It stated: “The key components of the additional investments needed beyond the refinery gate relate to the necessary expansions in regional pipeline systems and tanker capacity that are required to move volumes of crude oil and liquid products. In addition to this, some investments will be necessary for loading and receiving ports, and related storage capacity, as well as to expand the retail distribution network.

“Combined, midstream investment costs for the period up to estimated to be at around $1 trillion. All together, this results in an estimated oil- related investment requir6ement of $7.5 trillion between 2012 and 2035.

The report stated that over the period of 2012 to 2035, there will be need for upstream investment requirements amount of $5.2 trillion.  “Most of this investments will be made in non-OPEC countries.  Over the medium-term, non-OPEC will invest more than $170 billion each”.

It noted that OPEC is expected to invest an average of $35 to 40 billion yearly in the coming decade and over $50 billion yearly in the longer term.

The cartel noted that although OPEC member countries are concerned that huge investments might be made in capacity that might not be needed, they remain committed to supporting oil market stability.

“OPEC member countries are investing and will continue to invest in additional capacities. On top of the huge capacity maintenance costs that Member Countries are faced with, they continue to invest heavily in new upstream projects and in projects along the whole oil supply chain – in exploration, development, refining and transport. According to the latest list of upstream projects in OPEC’s database, Member Countries are undertaking or planning around 120 development projects during the five-year period 2013–2017, around two-thirds of which are already under development.

Meanwhile, OPEC could lose almost eight per cent of its oil market share in the next five years as the shale energy boom and other competing sources boost rival supply, offering the exporter group little benefit from rising world demand.

OPEC said in the report that it expects global demand for its crude oil to average 29.2 million barrels per day (bpd) in 2018, down 1.1 million bpd from 2013, because of increasing supply outside the 12-member group.

Under another, upside supply scenario, Opec sees an even larger drop in demand for OPEC crude to 28m b/d in 2018 — 7.6 percent less than this year and 2m bpd below what it is currently producing.

Al Badri stated: “There is no shortage of oil and resources are plentiful. Increasing global oil demand is supported by an expanding diversity of supply sources.”

 

[The Guardian]

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