Under investments causing ripple all around!

(MENAFN – Arab News) The abstract is now taking a concrete shape. The issue of investments in new capacity, or the lack of it to be specific, is starting to take center stage. Investment bank Barclays is reporting that investments in the sector are down by at least 12 percent.

“While everyone has been so focused on short-term demand, it now looks like we’ll see some real tightening in the market in 2010 due to the drop-off in non-OPEC supply,” said Amrita Sen, analyst at Barclays Capital in London. “There could be a real run-up in prices just as the world economy begins to recover, which is the last thing the economy needs on the way out of a recession.”

Non-OPEC production would fall, mostly in Russia and the US, the second and third biggest global oil producers after Saudi Arabia. Analysts see the two countries’ output declining a combined 1.55 million bpd through 2010. Potentially large drops are also expected in Mexico, the sixth-biggest producer, whose mature Cantarell offshore field has entered a decline, and Canada, the seventh, with its expensive oil sands production. Other at-risk regions include Norwegian and UK offshore fields.

In the US, the number of rigs drilling for oil and gas has fallen by almost 50 percent since September 2008, the steepest decline since 1986, oil services company Baker Hughes said. The global rig-count fell by 8 percent from September through February, and is expected to fall further in coming months, a spokesman said.

MENAFN