Oil industry focused on problems, not profits

The energy industry is investing too slowly in new supplies to prevent runaway prices from crossing the pain threshold for Asian consumers, industry experts and executives said this week.

The lure of $70 a barrel oil has failed to spur firms to develop enough new oilfields, refineries and pipelines to sate demand, leaving consumers facing the worst of both worlds – insufficient supplies at high prices – for as long as a decade.

The mounting challenges forced delegates at the Asia Oil and Gas Conference in Kuala Lumpur this week to focus on future problems, not today’s record profits.

“Prices will have to go up and people will use less — not everyone will be able to access (energy),” Fereidun Fesharaki of consultancy FACTS Global Energy Group told Reuters. Oil hunters are taking advantage of high prices to venture into new areas and revisit old ones, such as Malaysia’s Petronas exploring 10 deepwater sites off Borneo this year, but analysts expect few large finds, leaving Asia even more import-reliant.

The result may be continued high oil prices that hurt the budgets of importing nations, leaving them to do away with fuel subsidies that protect consumers from the pain of a free market. “It’s probably realistic to accept that a period of cheap oil is over,” Malaysia’s Prime Minister Abdullah Ahmad Badawi told delegates. “Consumers will have to bear some of these risks.” World supply is also uncertain, the annual conference heard, from debate over the true size of Opec members’ reserves and the theory of peak oil, to instability that raises energy security fears and the logistical challenge of isolated fields.

Financial Express