Abu Dhabi: A supply glut driven by increased crude output from the US, Canada and Iraq and demand loss from the US is expected to sharply drive down oil prices in the coming years, Dr Fereidun Fesharaki, a globally-renowned energy expert predicted on Tuesday.
Addressing delegates at the 21st Middle East Petroleum & Gas Conference (MPGC-2013) in the capital, Fesharaki said: “Supply outlook is stronger than ever. Between the US, Canada and Iraq, we would be looking at a supply growth exceeding the global demand growth. We expect short-term oil prices at $100-$110 a barrel, Brent range. But, by 2017-2018, the prices break to $80 per barrel range and stay there for a number of years.”
In that event, global liquefied natural gas projects of the size of $60 billion, $70 billion and $80 billion will have to be postponed, he said, adding the lower international crude prices would force governments of oil producing countries to “adjust their expenditures.”
“The US demand loss is just about half of China demand growth. The US gasoline demand is down 1.9 million barrels per day in the last five years and another demand loss of 1.7 million bpd is coming by 2020.”
However, Fesharaki said the US, the world’s biggest oil user, would continue to buy increasing quantities of Middle East crude grades.
“The US needs heavy crudes. Heavy grades come from Venezuela, Canada, Mexico and the Middle East. Venezuela is selling large volumes to China and India, Mexico is facing production declines and Canada is embroiled in political/environmental controversy,” Fesharaki said.
Separately, Maurizio La Noce, chief executive officer of Mubadala Petroleum, said the company, which currently has operations in 11 countries, is looking at East Africa and West Africa as the areas for its future growth.
Across its portfolio of energy assets globally, Mubadala Petroleum’s current total production is estimated at 400,000 barrels per day of oil equivalent.
