Enough dust has settled over the past year to give the global oil and gas business a clearer view of its new landscape. Holding little back, speakers at the annual IHS CERAWeek conference in February discussed how the industry has been shaped by the disruptive impact of North American shale production and predicted that many more months of financial pressure will spell the end for some companies.
The current industry situation is often compared with the last prolonged downturn in the 1980s—used by many in the oil patch as the measuring stick for rough times. But for Ali Al-Naimi, the Saudi Arabian minister of petroleum, the contributing factors are different this time around. Speaking in Houston at the annual gathering of top executives from operators, national oil companies, the service sector, and government, he explained that today’s crude market includes an expanded roster of producing nations and is under the influence of financial instruments that did not exist 3 decades ago. Al-Naimi then disputed the idea that his country is engaged in a global battle for market share that some claim is prolonging the bust. “Let me say for the record, again, we have not declared war on shale or on production from any given country or company—contrary to all the rumors that you hear and see,” he said. “We are responding to challenging market conditions and seeking the best possible outcome in a highly competitive environment.”
Nevertheless, Al-Naimi also argued that the market is simply not big enough for high-cost producers, and said they have three options: lower their costs, borrow more money, or liquidate....
Surviving the Downturn: Oil Executives See Continued Tough Times Ahead
Trent Jacobs, JPT Senior Technology Writer, Stephen Rassenfoss, JPT Emerging Technology Senior Editor
01 April 2016