Oil industry investment is recovering. Even so, Saudi Aramco’s chief executive is still warning there is a looming supply crunch down the road on current trends.
The oil consultancy Wood Mackenzie yesterday reported that the number of conventional oil developments (that is, other than US shale oil) to be greenlighted, is on track to double this year after more than halving in the 2014 to 2016 period, during which oil prices fell by about 60 per cent.
“The upstream industry is continuing on the road to recovery,” says Angus Rodger, an upstream analyst at Woodmac and the report’s author. This year “marks a turning point,” he added, with final investment decisions (FIDs) expected on about 25 major conventional oil developments, compared with 12 last year.
But on Monday, Amin Nasser, the chief executive of Saudi Aramco restated his warning about under-investment.
“About US$1 trillion in investments has been lost in the current downturn, concurrent [with] growing oil demand and the natural decline of developed fields,” Mr Nasser said in a speech in Istanbul. “Conservative estimates suggest we need about 20 million [additional] barrels per day over the next five years to counter these effects,” and current investment won’t be enough to meet it.
So, is the oil industry going to be able to meet rising demand or is it heading toward another crunch?
Mr Nasser, in fact, was citing last year's Woodmac report estimating that $1tn of planned oil projects had been canceled, postponed or otherwise shelved through 2020. Woodmac analyst Malcolm Dickson says he sticks by that assessment.
Mr Rodger notes that the investment getting the go-ahead this year tends the relatively low risk variety.
Typical was Liza Phase 1, a development off the coast of Guyana that was given the final go-ahead last month by operator ExxonMobil. The field, which lies in more than 1,500 metres of water, 190 kilometres northeast of the the South American country’s Atlantic coastline, will cost about $4.4 billion for its partners, which apart from Exxon’s 45 per cent operator’s interest, includes Hess, with 30 per cent, and a Cnooc Nexen joint venture, with 25 per cent, and is an addition to a much larger development.
Eleven of the 15 FIDs taken so far this year have been for brownfield developments, building off existing infrastructure and extending older projects. “Not only are these projects less risky than greenfield developments, they also tend to be less capital-intensive and are quicker to bring onstream, offering a quicker payback and better returns on development dollars," Mr Rodger says.
The big private-sector international oil companies have cut costs substantially to preserve cash and they can be selective about which of their large cache of projects they can finance. “We are beginning to see them leverage their financial strength to push forward the very best projects in that extensive pipeline,” Mr Rodger says. But elsewhere, he adds, “we are seeing small to mid-caps in the international sphere and the [national oil companies] in particular, especially in Asia, continue to stay cautious and pull back from major new project investments.”
So, what is the bottom line?
“We don't see a shortage of oil or gas supply in the near term, as there are abundant low cost sources of supply available around the globe,” says Mr Rodger.
That picture might change further down the road.
Company%20profile%20
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
UAE's final round of matches
- Sep 1, 2016 Beat Japan 2-1 (away)
- Sep 6, 2016 Lost to Australia 1-0 (home)
- Oct 6, 2016 Beat Thailand 3-1 (home)
- Oct 11, 2016 Lost to Saudi Arabia 3-0 (away)
- Nov 15, 2016 Beat Iraq 2-0 (home)
- Mar 23, 2017 Lost to Japan 2-0 (home)
- Mar 28, 2017 Lost to Australia 2-0 (away)
- June 13, 2017 Drew 1-1 with Thailand (away)
- Aug 29, 2017 v Saudi Arabia (home)
- Sep 5, 2017 v Iraq (away)
THE RESULTS
5pm: Maiden (PA) Dh80,000 1,400m
Winner: Alnawar, Connor Beasley (jockey), Helal Al Alawi (trainer)
5.30pm: Maiden (PA) Dh80,000 1,400m
Winner: Raniah, Noel Garbutt, Ernst Oertel
6pm: Handicap (PA) Dh90,000 2,200m
Winner: Saarookh, Richard Mullen, Ana Mendez
6.30pm: Sheikh Zayed bin Sultan Al Nahyan Jewel Crown (PA) Rated Conditions Dh125,000 1,600m
Winner: RB Torch, Tadhg O’Shea, Eric Lemartinel
7pm: Al Wathba Stallions Cup Handicap Dh70,000 1,600m
Winner: MH Wari, Antonio Fresu, Elise Jeane
7.30pm: Handicap Dh90,000 1,600m
Winner: Mailshot, Royston Ffrench, Salem bin Ghadayer
Stage 5 results
1 Tadej Pogacar (SLO) UAE Team Emirates 3:48:53
2 Alexey Lutsenko (KAZ) Astana Pro Team -
3 Adam Yates (GBR) Mitchelton-Scott -
4 David Gaudu (FRA) Groupama-FDJ 0:00:04
5 Ilnur Zakarin (RUS) CCC Team 0:00:07
General Classification:
1 Adam Yates (GBR) Mitchelton-Scott 20:35:04
2 Tadej Pogacar (SlO) UAE Team Emirates 0:01:01
3 Alexey Lutsenko (KAZ) Astana Pro Team 0:01:33
4 David Gaudu (FRA) Groupama-FDJ 0:01:48
5 Rafał Majka (POL) Bora-Hansgrohe 0:02:11
The specs: Rolls-Royce Cullinan
Price, base: Dh1 million (estimate)
Engine: 6.75-litre twin-turbo V12
Transmission: Eight-speed automatic
Power: 563hp @ 5,000rpm
Torque: 850Nm @ 1,600rpm
Fuel economy, combined: 15L / 100km
Indoor Cricket World Cup - Sept 16-20, Insportz, Dubai
Killing of Qassem Suleimani
NBA FINALS SO FAR
(Toronto lead 3-2 in best-of-seven series)
Game 1 Raptors 118 Warriors 109
Game 2 Raptors 104 Warriors 109
Game 3 Warriors 109 Raptors 123
Game 4 Warriors 92 Raptors 105
Game 5 Raptors 105 Warriors 106
Game 6 Thursday, at Oakland
Game 7 Sunday, at Toronto (if needed)
Read more about the coronavirus
Killing of Qassem Suleimani
THE%20FLASH
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ANATOMY%20OF%20A%20FALL
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UAE currency: the story behind the money in your pockets
Key figures in the life of the fort
Sheikh Dhiyab bin Isa (ruled 1761-1793) Built Qasr Al Hosn as a watchtower to guard over the only freshwater well on Abu Dhabi island.
Sheikh Shakhbut bin Dhiyab (ruled 1793-1816) Expanded the tower into a small fort and transferred his ruling place of residence from Liwa Oasis to the fort on the island.
Sheikh Tahnoon bin Shakhbut (ruled 1818-1833) Expanded Qasr Al Hosn further as Abu Dhabi grew from a small village of palm huts to a town of more than 5,000 inhabitants.
Sheikh Khalifa bin Shakhbut (ruled 1833-1845) Repaired and fortified the fort.
Sheikh Saeed bin Tahnoon (ruled 1845-1855) Turned Qasr Al Hosn into a strong two-storied structure.
Sheikh Zayed bin Khalifa (ruled 1855-1909) Expanded Qasr Al Hosn further to reflect the emirate's increasing prominence.
Sheikh Shakhbut bin Sultan (ruled 1928-1966) Renovated and enlarged Qasr Al Hosn, adding a decorative arch and two new villas.
Sheikh Zayed bin Sultan (ruled 1966-2004) Moved the royal residence to Al Manhal palace and kept his diwan at Qasr Al Hosn.
Sources: Jayanti Maitra, www.adach.ae
BLACK%20ADAM
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UAE currency: the story behind the money in your pockets
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
The specs: 2018 BMW R nineT Scrambler
Price, base / as tested Dh57,000
Engine 1,170cc air/oil-cooled flat twin four-stroke engine
Transmission Six-speed gearbox
Power 110hp) @ 7,750rpm
Torque 116Nm @ 6,000rpm
Fuel economy, combined 5.3L / 100km
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
KILLING OF QASSEM SULEIMANI
UAE currency: the story behind the money in your pockets
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
The%20National%20selections
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