High oil prices to stifle Gulf crude output in long term

Gulf oil heavyweights are reaping the fruits of strong oil prices in the short term but their crude production could plunge by at least 12 million barrels per day in the long term, according to an official US report.

In case oil prices remain above $90 a barrel, the crude oil output of the UAE and neighbouring Gulf producers could be as low as 27.5 million bpd in 2030 but could be as high as 40.9 million bpd in case of low oil prices of around $34 a barrel, said the report by the Energy Information Administration (EIA) of the US Department of Energy.
Although high oil prices will bring enough funds for Gulf states to invest in capacity expansions, they could encourage investments in the oil sector in other regions and at the same time depress demand in the long run.

In such a scenario, Gulf states could be forced to cut investment in capacity projects to pave the way for other producers and this will naturally depress their actual production, EIA said in its 2007 International Energy Outlook.

A breakdown showed the UAE could produce only around 3.7 million bpd in 2030 in the high oil price scenario but could pump as much as 5.7 million bpd in the low oil price case and fully utilise its heavy investment in capacity expansion.

Saudi Arabia, the world’s oil powerhouse, is projected to produce only near its current capacity of 11.6 million in 2030, if oil prices remain high but its output could soar to around 16.4 million bpd in case of low crude prices.

Kuwait, another Gulf Opec producer, is expected to pump nearly 3.1 million bpd in the high price case and as high as 6.2 million bpd in the low price case. Iran’s output was forecast at around 3.8 million bpd in the high price scenario and 5.8 million bpd in the low price scenario.

Emirates Business 24-7