Petroleum Companies Need to Focus on Reducing Industry Cost
"Investment in offshore oil production has increased from $150 billion a year to $360 billion a year over 10 years to maintain a production of 28 million barrels a day ... U.S. shale has not replaced offshore production, but (only) ... replaced conventional onshore oil production decline," Hemmingsen said.
Still, the short-term outlook arising from low oil prices poses a tremendous challenge to the offshore oil and gas industry, particularly for the rig sector.
"There is overcapacity that we haven't seen for 15 or 20 years ... with more than 125 jackups being delivered," the Maersk Drilling CEO added.
On oil prices, Sohmen-Pao expected the level to hover at around $70 a barrel as sufficient supplies will be made available by the market.
"I went to talk to a lot of oil companies in Europe and U.S. and ... most people now are saying there is enough oil at $70 per barrel, we will not run short for some time to come, so (we need to) get use to current pricing," he said.
While Saudi Arabia, OPEC's key producer, used to have an excess production capacity of 2 million barrels a day, "shale can give us up to 10 million barrels per day of extra oil as long as the price is around $70 ... technology is bringing that price down ... so shale has completely changed the game. We have enough oil for a long time to come," the BW Group explained.
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