The world will never be able to produce more than 89m barrels a day of oil, the head of Europe’s third-largest energy group has warned, citing high costs in areas such as Canada and political restrictions in countries such as Iran and Iraq.
Christophe de Margerie, chief executive of Total, the French oil and gas company, said he had revised his forecast for 2015 oil production downward by at least 4m barrels a day because of the current economic crisis and the collapse in oil prices.
He noted that national oil companies, which control the vast majority of the world’s oil, and independent producers, which play a key role in finding new sources, were “substantially limited in their ability to fund investments in the current [financial] environment.”
Oil prices have fallen from a record $147 a barrel in July to about $35 a barrel today, with the world consuming 84m barrels of oil a day. This year is expected to be the first when oil consumption fails to rise. Delays and cancellations in projects to extract oil from Alberta’s tar sands and Venezuela’s Orinoco belt – both expensive and environmentally difficult operations in which Total is active – will cut 1.5m b/d of supply that would have come on stream had oil prices remained strong.
De Margerie now expects a faster decline in production at older fields, such as those in the North Sea. At lower price levels, companies will find it harder to justify the greater cost of keeping such fields pumping.
Read more: Financial Times