Shell yesterday forecast that Brent crude oil prices may rise by up to 50% from today’s value to around $90-barrel over the next three years.
This is based on the Saudi-dominated cartel of oil-producing countries – along with Russia – maintaining their self-imposed cuts in output until 2021.
Obviously, N. Sea crude oil prices would likely fall from the current $60-65-barrel mark if OPEC abandoned its cap on production.
Ben van Beurden, Shell chief executive, said: “Looking ahead, higher global economic activity as indicated by the IMF’s global economic outlook and moderate oil price levels at the beginning of 2018 could create around 1.3 million b/d of additional demand growth in 2018, according to the IEA.
“If OPEC members and co-operating non-OPEC resource holders continue to limit production to 2017 levels, demand growth would have to be balanced by production growth from non-OPEC countries, mostly from the USA, and withdrawals from storage.
“A continuation of market rebalancing, as indicated by storage withdrawals, would support prices. Postponements and cancellations of new supply projects over the last few years could lead to further market tightening in the next few years.
“In such a scenario, we believe that the average Brent crude oil price may be 10% to 50% higher in 2021 than the 2017 average.”
The higher the price of crude oil rises, the more the remaining life of the North Sea basin is extended as ‘hard to reach’ and ‘yet to find’ fields become financially viable.
Meanwhile, Shell spent $24 million in exploring for new oil fields in 2017 – compared to $79.9 billion in 2016.
Even stripping out the £52.9 billion it paid for the BG acquisition – which is classed as capital investment – capex on new wells in 2016 was still $3 billion higher than in 2017.
16 Mar 2018