An “industry specialist” look at the rise in the price of oil in this week's magazine “L'Usine Nouvelle”.
Summary: World oil consumption continues to increase. In 2004, it increased by 3.2% compared to 2003. With the popularity of 4-4 large displacements, the development of China, India and other emerging countries, the trend will further accelerate.
Two questions dominate the market:
- What is the real production capacity of Saudi Arabia, which could serve as a safety valve in the event of a crisis?
- What will be the consequences of the scarcity of investment opportunities for low cost production?
Saudi Arabia (whose production is exclusively the responsibility of national companies with public capital) has always claimed to have the capacity to rapidly increase (a few weeks or months) its production with a minimum of investments to be committed. But reassuring statements to Westerners are no longer enough. No giant fields have been discovered for thirty years, the deposits are aging and extraction techniques have found their limits. With the approach of the test of truth, Saudi Arabia has just admitted that in reality, it would take 2-3 years to increase production, at the cost of colossal investments, for an unsatisfactory quantity and an oil probably bad quality.
Second source of concern: the lack of investment by the "majors". The International Energy Agency estimates that $ 6200 billion will be spent in the next 25 years to meet demand. So $ 180 billion a year, 50 billion more than what the tankers are doing now. In addition, no one knows if Yukos (Russian company) will escape bankruptcy, bringing with it all its infrastructure projects. The trend among oil companies is therefore to decline, to buy back shares rather than hyperrisk investments with low visibility.
"The current prosperity, it is true, does not push for the painful efforts of productivity in the western oil companies. However, they all know that they have eaten their white bread for a long time. The new exploration and production territories, whether very deep sea or very cold [...] would require gigantic investments. Nobody, for the moment, wants to take huge risks ”
Conclusion: quite disturbing.