Non-OPEC liquids growth potential of 5.5 MMb/p over the next five years has been reduced by over 2 MMb/d to 3.3 MMb/d, according to forecasts by energy analysts Rystad Energy.
The Norwegian firm’s research shows investments in oil and gas production are estimated to drop 20% in 2015, compared to 2014. Outside OPEC, US$200 billion in yearly capex is considered to be axed over a two-year period.
“Ultimately, for every billion dollars being cut in development capex on marginal projects, the production shortfall would amount to 10,000 b/d, says Rystad. “Only US production has been visibly impacted, with the trend turning from 20% annual growth during Q1 to a flat trend in Q2. The shortfall of global offshore production may be steeper if oil prices stay low throughout the year.”
“In the longer run, anything below $90/bbl is not sustainable, due to this steep but delayed supply response and increasing global base declines, while the cost of new production will remain high,” says Rystad Energy’s oil trade analyst Nadia A. Martin.