Increasing state ownership and rising resource nationalism are emerging as the main long-term threats to global oil supplies, says a report for the industry by an energy consultancy.
The report by PFC Energy highlights the shift in power towards state-controlled national oil companies. Multinationals own or have access to less than 10 per cent of world oil resources.
Resource nationalism, which is limiting access for international oil companies, and the national oil companies’ failure to reinvest profits in production, are limiting outlay required to replace existing resources, which are being substantially depleted.
Robin West, chairman of PFC Energy said: “The concern is not that the world is running out of oil, but rather it is running out of oil production capacity.”
The PFC study shows political factors are limiting capacity increases in Mexico, Venezuela, Iran, Iraq, Kuwait and Russia. Saudi Arabia is also limiting capacity expansion but because of a self-imposed cap, unlike the other countries. These seven account for 65 per cent of the world’s reserves and 45 per cent of crude oil production.
Lord Truscott, UK parliamentary undersecretary of state for energy, said: “There is a need in parts of the world for technical investment. I see constraints in the future if there is not investment in new and existing fields.”
Before 1961 the industry could invest almost anywhere except the Soviet Union and Mexico. Then it was pushed out of the Middle East and Venezuela. Investment by international companies shifted to the North Sea, north slope of Alaska and offshore. But the North Sea and Alaska are maturing even as output in key producers is declining.
Mr West said: “Should demand outstrip supply, you will have a run-up in prices, massive demand destruction and substitutions. It will create tremendous pressures in the international petroleum system, the international economic system, the international political system.”
Jim Mulva, chief of Conoco-Phillips, said: “To the extent that access has become more restricted for the international oil companies, it could lead, and may lead, to constraint on supply.” Yet there is little the oil companies can do to change that. “For international oil companies, access is a real challenge,” Mr Mulva said.