Upstream Oil Projects Will Aggravate Oversupply and Exceed Demand : Total

Total SA's CEO Patrick Pouyanne says the market will grow faster than demand for at least another year

Total SA's CEO Patrick Pouyanne has told media at the recent International Petroleum Technology Conference in Doha that a surge of upstream oil projects will result in the market growing faster than demand for at least another year, Platts report.

"The market is oversupplied and production capacity will continue to grow because a lot of projects were sanctioned in 2013 and 2014." said Pouyanne.

He added that the bulk of these projects were set to get underway in 2016 and 2017.

The CEO noted that 2015 has already witnessed one of the two biggest global crude and condensate annual output increases of the past decade - a rise of 1.7 million-1.8 million barrels per day (bpd) compared to 2014.

Pouyanne also warned that even a slowdown to 1.2 million bpd in upstream liquids capacity additions growth would still outstrip an expected pick up in demand; therefore, "We need to exit from this momentum where we have many projects coming on stream.

"We don't expect a [price] recovery in 2016."

Nonetheless, Pouyanne believes the current state of affairs can be improved, and he pointed out that his company this year cut 15 percent – a savings of over $1.2 billion - from its operating costs in Qatar.

"We spend too much money in this industry: it's just a question of refocusing priorities," he said.

"The industry, clearly, after six to seven years of very high prices, we lost some of our focus on costs, so we have to refocus; we can do it."

Pouyanne's remarks were in stark contrast to those he made at the beginning of this year, when he told delegates at the Davos World Economic Forum that oil prices will bounce back and that the negative effects of current oil prices may be overplayed.