VIENNA – Oil producers’ struggle to keep up with rampant global demand growth will only be won with access to oilfields now off-limits, Exxon Mobil (XOM.N: Quote, Profile, Research) chief executive Lee Raymond said yesterday.
“The outlook sets before us an enormous task of finding and producing the huge and increasing amounts of energy required by the people of the world,” Raymond said in a speech to the OPEC International Seminar in Vienna.
Worries that global oil demand is growing faster than producers can pump have underpinned a 35 percent surge in crude prices this year to a peak of $49.40 a barrel, prompting some to declare the end of the cheap oil era.
Raymond said he expected world energy demand to grow by between 65 and 85 million barrels of oil equivalent per day by 2020, roughly eight-times the current rate from the world’s top producer Saudi Arabia.
“The future need for petroleum energy will be such that restrictions in whatever form and wherever imposed, will jeopardize access to adequate energy supplies to world consumers,” he said.
International oil companies have been kept out of a leading producers Saudi Arabia and Mexico, while environmental regulations have hindered exploration in potentially energy rich areas like the U.S. Arctic.
“Today you see a number of access restrictions around the world. These restrictions exist in energy importing countries such as the United States. They also exist elsewhere, in energy exporting countries,” Raymond said. A political push in the United States, the world’s largest energy consumer, for independence from foreign producers was also an unnecessary barrier to supplies, Raymond said.
“Calls for energy independence started around the Nixon administration. Energy independence was a flawed concept then and it is a flawed concept now,” he said. “We should be focusing on energy interdependence.”
Both U.S. President George W. Bush and Democratic candidate John Kerry have called for a reduction in U.S. dependence on foreign oil, even as import levels grow to compensate for rising consumption and declining production.
The U.S. imports more than half the oil it consumes.
A further problem facing the oil industry lies in stretched refining capacity, Raymond said, after companies shied away from the downstream sector marked by high costs and unreliable returns. Refineries across the globe are now running at near full steam to match rising consumption, though few new plants are in the works.
“The question is not what profit margins are today, but what will margins be like in 12 to 15 years?” Raymond said. “Even if you start to build a new refinery today, that’s about how long it will take for you to get done.”
(Reporting by Richard Valdmanis, Vienna newsroom)
REUTERS NEWS SERVICE