Qatar’s Energy Minister believes that oil prices have now bottomed out and sees signs of recovery in 2016.
Speaking in Doha on Sunday, Dr Mohammad Bin Saleh Al Sada, who is also the acting president of OPEC bases his optimism on the latest projected key market fundamentals for 2015 and 2016.
His comments come ahead of the sixth Asian Ministerial Roundtable in Doha next month where delegates are expected to discuss current oil price volatility and whether or not it is part of the usual industry cycle and coal being the real competitor (not renewables) to gas in Asia’s energy mix.
According to Al Sada’s ministry’s projections, world GDP growth in 2016 is slated to be 3.4 per cent compared to the expected 3.1 per cent in 2015 which, they say, translates to an increase in global oil demand by 1.3 to 1.5 million extra barrels of daily production.
“We have already spent 4 billion KD ($13 billion) during the fiscal year 2014-2015, and so far, we have spent 2 billion KD ($6.6 billion) during this fiscal year"
- Kuwait Oil Minister, Dr Ali Al-Omair
Al Sada stated that the growth in supplies from non-OPEC producers seen over the past five years has substantially reduced in 2015 and is likely to show zero to negative growth in 2016.
Meanwhile, demand for OPEC oil is expected to become healthier from 29.3 million bpd in 2015 to 30.5 million bpd in 2016 as indicated by increasing demand from both developed and emerging markets.
In addition, he added that the low market prices prevailing at present has caused oil companies to reduce their capital expenditure by almost 20 per cent this year from US$650 billion in 2014. This trend of reducing investment in the oil industry could result in production shortfalls down the line.
OPEC and non-OPEC countries are planning to meet at expert level in Vienna later this month to discuss and evaluate objectively the oil market situation in yet again changing scenario.
Low oil prices no deterrent to Kuwait projects
Meanwhile Kuwait’s oil minister, Dr Ali Al-Omair doubled down on his country’s efforts for current and long-term energy projects particularly in the heavy oil and gas production despite low oil prices.
“We have been a reliable supplier for a long time, and we intend to continue being one in the future,” he told an industry audience at the beginning of the Oil & Gas Show (KOGS) on Sunday.
Currently producing 3 million bpd, the country is on track to reach its 4 million bpd target by 2020, a target, which Omair said would only be possible due to the huge investment Kuwait has been making in the sector in recent years.
Over US$106 billion of investments in Kuwait’s oil and gas sector is set to be allocated over the next five years with about half of this having already been invested to date, the minister said.
“We have already spent 4 billion KD ($13 billion) during the fiscal year 2014-2015, and so far, we have spent 2 billion KD ($6.6 billion) during this fiscal year.”
Omair highlighted how rig counts have increased in the country and that projects for four crude oil gathering centres and two booster stations were underway. Around 2,000 oil and gas wells are expected to be drilled by the end of the decade.
With Kuwait facing severe gas shortages, Omar said that the second and third phases to develop gas from Kuwait’s Jurassic sour gas fields were progressing. Additionally he said that Gas Train Unit 4 has already been commissioned and Train unit 5 would soon be tendered to be built.
He also hinted at increasing the role of the private sector in the development of Kuwait’s oil and gas and overall economy.
“Kuwait's energy sector faces the important challenge of securing the energy supply needed to sustain a domestic growing economy while addressing pollution and global Green House Gas emission issues,” he said, while considering how Kuwait is making inroads on diversifying its economy.
Around 15 per cent of its Kuwait’s energy demand, he said, would be met through renewable energy sources.