Oil price too low to support investment

Oil prices, at around $50 a barrel, will not support huge investments needed in the sector to meet demand, the secretary-general of the International Energy Forum said yesterday.

"Current prices will not support the huge levels of investment needed to meet future oil demand," Noe van Hulst told the opening of a two-day forum on cooperation between national and international oil companies in Kuwait.

"Around $12 trillion of investments are needed in the oil and gas sector by 2030, or nearly 500 billion dollars per annum, to maintain market balance," Hulst of the Riyadh-based IEF said. He warned that a delay in investments and projects, which is already taking place, will affect future energy supplies and he called for the maintaining of investment plans, as much as possible, to avoid a "boom-bust cycle."

The forum, the first of its kind, will discuss ways of enhancing global energy security through cooperation and partnership between national oil companies and international oil companies.

Qatar's Energy Minister Abdullah Al-Attiya said the global economic downturn, its impact on a drop in demand and a slide in the price of oil and gas "represent the main challenges facing the oil and gas industry".

"The slide in oil price for a prolonged period while the cost of projects is not dropping fast enough, will (negatively) affect the volume of investments and threaten stability of the markets in the long-term," Mr Attiya said.

Oil prices fell in Asian trade yesterday as global stocks turned lower following a recent rally.

New York's main futures contract, light sweet crude for delivery in May, slid $1.10 to $51.28 a barrel in the afternoon.

Brent North Sea crude for May delivery shed 90 cents to $51.08.