The Organisation of Petroleum Exporting Countries (OPEC) has estimated a significant rise in global oil-driven investments up to the tune of $10.5 trillion by 2040.
OPEC’s Secretary General, Muhammed Barkindo, who disclosed at the cartel’s 5th Kuwait Oil & Gas Show, noted that the sector had suffered a terminal crash in capital expenditure, freezing more than $1 trillion worth of investments in two years – 2015 and 2016.
Delivering his Keynote Address titled ‘New Energy Era: Transformation, Diversification and Integration’, Barkindo described the doldrums in 2015/2016 as one of the “worst deferments in capital investments.”
According to him, oil price dropped below $40/b by end of 2008 due to overwhelming glut, but bounced back the following year to over $100, when governments of oil producing nations, including Nigeria, started employing economic recovery measures to leapfrog the glut.
Since then, prices hovered between $100 and $125 until 2014 gliding into 2015, when prices began to crash at alarming rate until it dropped below $30 per barrel, causing a global drawback in capital investments.
Barkindo explained further that before the end of 2016 annual investment in oil and gas projects had fallen from $780 billion to $450 billion from 2014 to 2015.
The International Energy Agency (IEA) attributed the development to depletion of oil wells at an average rate of 9 per cent per annum.
The agency in its World Energy Investment report 2016 stated: “There is evidence that cuts in exploration activities have already resulted in a dramatic decline in new oil discoveries, dropping to levels not seen in the last 60 years.”
However, with the glaring resurgence of activities in the sector due to increasing global demand, Barkindo proposed that there will be positive rise in oil prices; a situation that would naturally pave way for huge capital investments to flourish with a marginal figure of 10.5 trillion in the period to 2040.
- Business Eye