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Now is time to invest, says UAE energy minister

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Staff Writer | November 10, 2016
Oil companies that invest during the current downturn in oil prices stand to profit the most when supply and demand comes back into balance.
Suhail bin Mohammed Faraj Faris Al Mazrouei
Emirates   ADIPEC 2016
This is according to the UAE Minister of Energy Suhail bin Mohammed Faraj Faris Al Mazrouei.

The long-term demand for oil outstripped supply, and that for companies with strong balance sheets and a long-term view now was the time to invest, not to withdraw, he said on the sidelines of the VIP Programme on the UAE’s future energy vision.

The programme has been held during the current Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC 2016).

"The oil industry is inherently cyclical - this is a basic point that often gets overlooked in the short-term noise - and finding an equilibrium between supply and demand is almost impossible," said Al Mazrouie, who is also the managing director of Abu Dhabi's International Petroleum Investment Company, IPIC.

"However, demand has consistently increased, and the business cycle that drives an increase in demand moves much more quickly than the oil industry can expand its capacity for supply."

US$200-billion worth of oil and gas projects had been postponed worldwide because of the fall in prices, he said.

"With the industry needing between six and nine years to move from discovery of new deposits through to production, the dramatic fall in investment would leave companies making those cuts slow to respond when the market started to rise."

By contrast, those that invested while asset prices were low would be ideally positioned with to meet increased demand with additional capacity, gaining a bigger share of a future rising market, according to the energy minister.


 

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