Demand for OPEC crude oil will recover before the end of the decade, as a flood of crude from the US’ shale oil boom will eventually stabilise and demand looks set for more growth over the next seven to eight years, David Dalton, regional president for BP in the Middle East, said Monday.
“We expect that the market requirement for OPEC crude could fall by the middle of this decade,” Dalton told the Middle East Petroleum & Gas Conference in Abu Dhabi.
According to Platts, he said demand for OPEC crude, also known as the “call on OPEC” by oil analysts, would likely remain under short-term pressure as the US completes the process of bringing hefty amounts of new crude oil to market from shale exploration.
“The US will be self-sufficient in its energy needs by 2030,” said Dalton, referring to BP’s own long-term energy forecasts.
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But he stressed that a multitude of supportive “above-ground factors” had been key to the success of shale oil and gas production in North America — adding that those same factors do not exist elsewhere in the world.
The US has benefited from a highly developed private oilfield services sector, private access to land, good availability of water and a solid infrastructure, as well as a favourable fiscal and regulatory regime, as it has developed shale over the past ten years.
The US is unique in having all of those factors in one operating environment, said Dalton. “In our view, the same above-ground factors will not be replicated across the globe in the 2030 timeframe.”
In particular, the Middle East seems unlikely to develop shale production at high levels over the next 15 years, increasing its own dependency on classic sources of natural gas, especially gas associated with crude oil production.
“The urgent focus for the Middle East over the next coming years will be natural gas,” said Dalton, adding that “the era of cheap gas associated with oil is over.”
