APIC ’08: Crude to touch new highs on low supply

27 May 2008 06:36  [Source: ICIS news]

SINGAPORE (ICISnews)--Crude oil prices are expected to rise further as producers are not increasing supplies fast enough to meet the rising global demand, Purvin & Gertz vice president and director of consultants John Vautrain said on Tuesday.

"Demand for crude has been growing rapidly, (but) spare production capacity is no longer as great as it once was," Vautrain added at the Asia Petrochemical Industry Conference (APIC)in Singapore.

Net crude demand growth in 2008 was projected at 1m bbl/d in 2008, he said.

"Worries about adequacy of supply have triggered the price rise," amid uncertainty surrounding production from the three major bloc crude oil suppliers – non-OPEC, Commonwealth of Independent States (CIS) and OPEC.

"Non-OPEC R/P (reserves/production) ratio is declining after peaking in the mid-1990s," he said. "Recent experience is non-OPEC replaces about 75% of production with new reserves – suggesting production could fall in the medium term".

While CIS has made substantial investments to raise reserves over the past decade, "production is responding and can increase more if logistics issues can be resolved although Russian policies are not aligned to maximum production," he said. In fact, "Russia acts like a de facto member of OPEC".

There is also the issue of uncertainty surrounding OPEC, as "no one really knows what OPEC reserves are". OPEC is now seeking to expand production capacity, but the question is "how much more how fast?"

Vautrain said global crude oil demand stood at around 87m b/d in 2007, citing data from Purvin & Getz.

The APIC conference runs from Tuesday through Wednesday

ICIS custom publishing and The Chemical Daily have produced an official 84-page special publication on Asian petrochemicals for the APIC event
To discuss issues facing the chemical industry go to ICIS connect

By: Cheang Chee Yew
+65 6780 4359

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly