TOTAL’s CEO, Christophe de Margerie, has become even more pessimistic on the future of oil supplies. In 2007, when prices were rising, he suggested it would be very difficult for production to reach even 100mbd, versus the 130 mbd or more assumed by the IEA and the US government.
Now, he is warning that the limit may be 89mbd, only 4mbd above recent production levels, due to 3 main factors:
• Project delays/cancellations as oil prices weaken
• Faster output decline in older fields, such as the N Sea
• Political constraints in Iran and Iraq
This forecast highlights a key dilemma for the oil-dependent chemical industry. Oil prices are currently too low to encourage necessary investment for the future, even if there were no political obstacles. But as and when oil supply and demand do begin to rebalance, it will be too late to bring on new supply quickly. At that point, oil prices of $100/bbl might not be just the temporary phenomenon that we saw last year.