The CEO of Saudi Aramco, Amin Nasser, was recently quoted at a conference in Istanbul as saying that the world is likely heading towards an oil supply shortage before too long as a result of falling discoveries of new conventional oil reserves and steep drops in new investment.
This situation — peak oil for conventional oil fields, which was passed several years back, and the growing dependence on expensive “unconventional” options — is one that we’ve reported on numerous times now.
We’ve also reported on the way that the oil price crash of recent years has led directly to rapid increases in the debt levels at many top oil companies, and to a steep drop in new investments.
While taking an oil exec at their word when they’re discussing the oil market is probably ill-advised, in general, Nasser is more or less just stating the blunt reality of the situation here — as far as general trends go, oil is only going to get more expensive as time goes by, as cheap conventionals are rapidly being depleted.
“If we look at the long-term situation of oil supplies, for example, the picture is becoming increasingly worrying,” Nasser commented, as reported by Reuters. “Financial investors are shying away from making much needed large investments in oil exploration, long-term development and the related infrastructure. Investments in smaller increments such as shale oil will just not cut it.”
To put a figure to that, around $1 trillion in new investments have been “lost” since 2014 or so. This only compounds the situation as regards the increasing difficulty of finding new conventional oil reserves. The easiest to find and develop have been in production for a long time now — what remains are the less attractive options. More