A look of "industry expert" on the rising price of oil in the magazine "L'Usine Nouvelle" this week.
Abstract: World oil consumption is increasing. In 2004, it increased 3.2% over 2003. With the popularity of the 4-4 big cars, the development of China, India and other emerging countries, the trend will further accelerate.
Two questions dominate the market:
- What is the real production capacity of Saudi Arabia, which could serve as a safety valve in case of crisis?
- What will be the consequences of the scarcity of investment opportunities for productions at low cost?
Saudi Arabia (whose production is exclusively the responsibility of national companies with public capital) has always claimed to have the ability to increase rapidly (weeks or months) production with minimal investment required. But the reassuring statements towards Western no longer enough. No giant fields have been found since thirty years older deposits and extraction techniques have found their limits. With the approach of the test of truth, Saudi Arabia has just admitted that in reality 2-3 years it would take to increase production, the huge investments price for an unsatisfactory amount and probably oil bad quality.
Second source of concern is the lack of investment of "majors". The International Energy Agency estimated 6200 billion dollars investissemnts that should be made in the coming years to 25 hope fill demand. So 180 billion per year, 50 billion more than currently tankers. Also, does anyone know if Yukos (Russia's) escape bankruptcy, taking with it all its infrastructure projects. The trend among oil companies is in decline, with the share purchase preference to low visibility hyperrisqués investments.
"The current prosperity, it is true, does not push the painful efforts of productivity in the western oil companies. Yet all know they have eaten their white bread for a long time. The new exploration and production areas, either very deep or very cold weather [...] would assume gigantic investments. No, for the moment no one wants to take huge risks "
Conclusion: quite disturbing.