LAUSANNE, Switzerland, April 22 (Reuters) – Low crude prices will trigger consolidation in the oil industry but a new bull market might arrive much sooner than expected given the huge scale of capital and workforce withdrawal in the sector, a former boss of oil major BP said.
"The actions the industry is taking to withdraw capital are laying the seeds for the next bull market," Tony Hayward told the FT Commodities Summit.
"The peak of U.S. shale supply has arrived – earlier than anticipated ... The supply chain in the U.S. has been decimated ... It will take several years to take activity back," Hayward said.
He compared current developments to the situation at the end of the 1990s when oil companies slashed investments, which ultimately sparked an oil price rally to record highs in 2003-2007.
Hayward now serves as chairman of commodities giant Glencore and chief executive of mid-sized oil producer Genel , which is active in Iraqi Kurdistan.
"Certainly there will be consolidation in Kurdistan as much as in other places. We may be active in consolidating and we may be consolidated. We can play both ways," he said.
He said that although the oil industry would see a wave of consolidation, major deals like the $70 billion acquisition by Royal Dutch/Shell of BG would be difficult to repeat.
"There are relatively few easy targets ... It doesn't appear to me that BP is a willing target."
He said he believed OPEC's strategy was working and that the producer group, which at its last meeting in November decided against cutting output despite a sharp drop in oil prices, would ultimately regain market share.
He added that even if Iran and the West agreed a deal curbing Tehran's nuclear programme, it would take several years for oil firms to agree contracts and start investing in Iran's sanctions-hit oil industry – meaning the country would be unable to ramp up exports steeply in the next couple of years.
(Editing by Dale Hudson)
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