Americas News
OPEC Wants Closer Ties With Growing U.S. Shale as Saudi Aramco Worries About $20 Trillion of Needed Investments
Stating that the nation's production efficiency is "something we in the industry need to learn," Mohammed Barkindo, secretary general of the Organization of the Petroleum Exporting Countries (OPEC) has invited U.S. shale officials to join him at the cartel's summit in Vienna in June.
Barkindo made the invitation while attending a dinner with the oil executives at the CERAWeek energy conference in Houston; there, he expressed his admiration for the ability of the Americans to rebound from the crude downturn by remarking, "The entire industry could learn something from them: they are able to raise production and raise efficiency, [and] it's something we in the industry need to learn."
He added that U.S. producers are also able to tap capital markets more expertly, which is vital at a time when analysts insist that much more investment is required to meet future demand: "A major concern is our industry's inability to attract capital; this is extremely risky."
One OPEC member that might welcome the U.S. to Vienna is Saudi Arabia, purely to learn more about how producers were able to improve their operations so quickly: presumably, the knowledge would bring the Saudis closer to offsetting the negative effects of the natural decline in their developed fields and help achieve the $20 trillion in investment that Amin Nasser, chief executive officer of Saudi Aramco, told CERAWeek delegates is necessary over the next 25 years to fulfill global demand.
Nasser also stated that investments "will only come if investors are convinced that oil will be allowed to compete on a level playing field, that oil is worth so much more, and that oil is here for the foreseeable future."
Nasser, whose company would benefit from higher crude prices as it prepares to undertake an Initial Public Offering, added, "That is why we must push back on the idea that the world can do without proven and reliable sources. We must challenge mistaken assumptions about the speed with which alternatives will penetrate markets."
It is unclear what role the U.S. oil executives would play at the OPEC summit, and it's also unclear the level of enthusiasm they have for the proposition; the only thing that seems certain is that Barkindo's offer amounts to one more sign of American production supremacy on the world stage.
And as far as the Energy Information Administration is concerned, that supremacy appears to grow almost daily: on Tuesday it reported that it expects domestic crude production in 2018 to rise over 120,000 barrels per day (bpd) more than previously expected, making the U.S. a bigger oil producer than top OPEC supplier, the Saudis.
The EIA expects U.S. crude output in the fourth quarter of 2018 to reach an average of 11.17 million bpd, and for 2019 it forecasts a crude production increase of 570,000 bpd to 11.27 million bpd.
As for U.S. demand, the EIA believes it will grow this year by 470,000 bpd, compared to its previous forecast of 450,000 bpd, and for next year it will rise by 360,000 bpd versus a previous forecast of 350,000 bpd.
Downplayed in OPEC's courtship of the Americans was any concern about overproduction once again causing a global glut: that's because earlier this week Barkindo expressed confidence that worldwide demand is strong enough to offset a predicted second wave of intense U.S. output.
