A boom in shale oil and gas production will challenge conventional oil in the long term, Kuwait oil minister Mustafa Al Shamali said in remarks published late on Sunday.
The shale boom, however, won’t have an impact on oil in the short or medium term and the exports of Gulf Arab producers to the United States haven’t been affected yet, Shamali said, according to the official Kuwait News Agency, or KUNA, but he didn’t elaborate on the challenges.
US oil production has surged thanks to new drilling and extraction methods in places such as North Dakota and Texas, boosting output of “shale” or “tight” oil. Some analysts say that threatens demand growth prospects for the Organisation of the Petroleum Exporting Countries. Opec secretary general Abdullah Salem Al Badri, however, told The Wall Street Journal last week that the boom in US shale production won’t last, and the world will need more oil from the group by the latter half of the decade.
The comments of Shamali and Al Badri come after some Opec members have in recent months offered varied reactions to mounting US production. In May, Nigerian Oil Minister Diezani Alison Madueke warned that rising tight oil production is a grave concern for African Opec members, who collectively saw their shipments to the US fall 41 per cent from 2011 to 2012, according to data from the US Energy Information Administration.
By contrast, Opec kingpin Saudi Arabia last month acknowledged the rising impact of the US boom without voicing any specific concern.
In a separate note, Shamali said that crude price of $100-$110 a barrel is currently fair for all parties, whether producers or consumers.
Kuwait is currently producing around 3.2 million of crude oil a day and is on track to increase its capacity to 4 million barrels by 2020, he added.
