By Udeme Akpan
Investments in the exploration and production of crude oil have stabilised at $530 billion globally.
Available data showed that investments had dropped by 40 per cent since 2014 as a result of the lull in the global oil market.
But the Secretary General of the Organisation of Petroleum Exporting Countries, Dr. Mohammed Barkindo said that investments have recently stabilised mainly as a result of the presence of clear market leadership and the expectation of a balanced market in the near future, given the cooperative actions taken by OPEC and non-OPEC producers.
“In short, we have made tremendous progress in rebalancing the market and giving the market strong direction through our determined actions and high degree of conformity. But our joint deliberations with Russia concluded that while the rebalancing goal is on its way to being achieved, more needed to be done to draw inventories toward the five-year average.”
“This set the stage for the successful meetings held last week in Vienna, where 24 nations comprising both OPEC and non-OPEC producers demonstrated the cohesion and consensus that the markets needed to see by extending the Declaration of Cooperation by nine months. This was a major achievement, in which we can all justifiably take pride.”
“If we look ahead, we see four key drivers at play in the market: (1) robust oil demand growth, supported by an improving global economy; (2) the natural decline in legacy fields; (3) the impacts of investment cuts of roughly a trillion dollars over the past two years and the continued lag in sizeable investments in long-term projects, as opposed to shorter-term incremental investments; and (4) the new dynamic of cooperation between OPEC and non-OPEC producers, led by Russia, to keep markets in balance.”