Abu Dhabi: US shale production is expected to go up as oil prices increase due to Opec agreement, a top energy official from the US Department of State told Gulf News in an exclusive interview.
“As a result of Opec action, prices rose by a few dollars and as a result you’ve seen shale oil production going up again in the United States. We had hit a low of 8.4 million barrels a day of the total production, we are now back up to 8.7 million barrels a day,” said Amos Hochstein, special envoy and coordinator, international energy affairs, US department of state.
He expected US oil production to reach 9.5 million barrels a day next year, similar to production levels two years ago.
“As long as prices are $50 or above, we will see an increase in production in the United States. In 2014, when oil prices collapsed, shale oil was considered expensive. We are seeing that the cost of shale oil has reduced very significantly and therefore it is already profitable at today’s prices.”
Oil prices have gone up by more than 20 per cent since the 13 Opec member countries and 11 oil producers from outside the group reached an agreement to cut production by about 1.8 million barrels a day last month.
The historic deal, the first in 15 years, came into effect from January 1 with oil producers promising to slash output to comply with the deal to rebalance oil markets.
Hochstein, who was in Abu Dhabi as part of Atlantic Council Global Energy Forum, also said he doesn’t expect any changes in the energy policy of the United States under the new administration of Donald Trump.
“I personally don’t expect that any changes could come or actually have an impact on the energy markets any time soon. Much of the changes are already in place, the trajectory of the market is there and I think that’s where we are going.”
When asked whether Trump will encourage shale oil production, he said it will continue to rise or fall based on global price of oil and has nothing to do with the US government.
“Right now, the US is an important swing producer for global energy market that is entirely in the control of the market and prices. The US government, Trump administration or others will have very little impact on it.”
Speaking on the renewable energy sector in the US, he said the sector will continue to increase in the coming days and over $50 billion worth of investments were made in the renewable energy industry last year.
“The US last year has put in place a five years of tax credits for renewable energy so we have another four and half years of extended tax credits which will encourage continued investment.”
Praising the UAE energy plan 2050 announced by the government last week, he said the leadership by the government is remarkable and is looking into the future of what the energy world looks like.
“Today the leading country is the UAE. No one is looking into the future as aggressively and as proactively as the UAE.”
The UAE energy plan has a target of 44 per cent clean energy, 38 per cent gas, 12 per cent clean coal and 6 per cent nuclear by 2050.
The strategy will aim to invest Dh600 billion to meet demands for energy and ensuring the sustainability of growth in the UAE’s economy, and will also result in savings of Dh700 billion.
