(MENAFN- Arab Times)
Kamel Al-Harami
Despite the reduction in oil prices to below $30 per barrel in order to curtail growth in shale oil production, the non-conventional oil sector in the United States of America is developing at a rate of 20 percent per annum.
The message is clear — shale oil is here to stay and will be in direct competition with the cheaper traditional oils.
There is no doubt in this regard, especially with ExxonMobil investing in the shale oil sector. It is crystal clear that it will make all sorts of cuts and use its technical knowledge to ensure it will be more viable and commercially acceptable, and can generate profits in line with the traditional oil producers. It is planning to grow by producing shale oil from the current level of 200,000 barrels per day to 750,000 barrels by the end of 2020 from its recent acquisitions in Texas and South Dakota that cost more than $6.6 billion.
Oil companies are now finding their own backyard in the USA more interesting to book and find more oil reserves to boost financial returns and rewards for its shareholders in their own oil core business.
The steady growth in USA oil production is the main factor behind curbing the increase in oil prices to above $60 per barrel despite the past OPEC compliance by more than 90 percent to the production cuts exceeding the accepted level that was agreed with some other members, as some shale producers can compete with $50 level.
Oil producing countries must strive from today to prepare plan B for the future because depending on oil as sole income for their economies is not viable, considering the fact that if USA is finding and encouraging investments in shale oil and gas sector, other countries will follow suit. International oil companies that are investing in non-traditional oils will do the same in other countries that have higher shale oil reserves of almost double the current availability in USA such as China, Algeria and Russia.
Therefore, the trend and growth of shale oil sector will not stop. Oil producing countries particularly our countries in the Arabian Gulf region will have to think twice. Plan B must be prepared before it is too late.
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By Kamel Al-Harami
Independent Oil Analyst
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