August 25, 2016
By Jarand Rystad, Managing Partner, Rystad Energy
Short term, the question is, when will the oil market rebalance? What will this mean for the oil price? Will shale oil alone be able to close the potential supply gap in 2017 and 2018? Which other sources of short and medium supply exists? And at what cost? Will offshore projects, like the three big fields in the Barents Sea; Johan Castberg, Alta/Gotha and Wisting, be competitive and thus see a final development decision?
The long term issue is related to the carbon constrained world. Is it possible to combine oil and gas growth with the climate ambitions according to the Paris agreement? Given that we should limit fossil fuel emissions to between 1130 and 2100 Gt, which oil and gas resources could be produced, and which resources must remain in the ground? What is the role of Norwegian oil in this context.
During ONS, we at Rystad Energy will shed light on these issues through our 25 different knowledge presentations. Based on facts we have gathered and analyzed, we can conclude that
1) the oil market will rebalance very soon,
2) oil prices will be up in the 4thquarter,
3) shale will be able to deliver sufficient new volumes in 2017 putting a temporary limit to the oil price recovery, however
4) marginal costs for shale will increase rapidly,
5) this will bring new offshore projects back to a competitive position from 2018 onwards,
6) this includes the three Barents Sea stand-alone projects and 30 subsea projects in Norway,
7) finally, this also includes field development projects that are sustainable from a climate perspective.
Thus, after the toughest downturn ever for the Norwegian oil sector, we see light in the end of the 2015-2017 tunnel!
About Rystad Energy
Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy consulting and research products.
Rystad Energy’s headquarters are located in Oslo, Norway. Further presence has been established in Norway (Stavanger), the UK (London), USA (New York & Houston), Russia (Moscow), Brazil (Rio de Janeiro) as well as Singapore and Dubai.