Oil industry needs more investment to avoid supply shortages: OPEC

The global oil industry should promote investments to ensure it can adapt to consumption growth in the future and avoid supply shortages, OPEC Secretary-General Mohammad Barkindo told a conference in Baku.

Last year, the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers, led by Russia, decided to cut the oil supply by 1.8 million barrels per day (bpd).

That move was aimed at tightening the market and boosting prices that fell to their lowest in more than a decade in 2016 to less than $30 a barrel.

“The next critical phase before us in the whole process is to sustain this accomplishment of market rebalancing and gradual recovery in investments and the return of confidence in our industry,” Barkindo said.

He added that ensuring the availability of adequate levels of investment in a predictable fashion is one of the greatest and clearest challenges.

The pace of investment has rallied this year but there were not enough “robust investments in long-cycle projects,” Barkindo said, highlighting that they are “the base load of future supply and the foundation of this industry’s future.” 

The required investment for the oil sector until 2040 is estimated at about $10.5 trillion to cover future oil demand that is projected to exceed 111 million bpd, he noted.