The lowest oil prices in more than a year will have no impact on current projects in the North Sea, an industry expert said yesterday.
Oil at just under $100 a barrel was still “a strong pricing environment”, according to Andrew Reid, Aberdeen-based chief executive of energy consultant Douglas-Westwood.
He said: “Most oil and gas companies plan investments on a medium to long-term basis, so the current pricing situation will not impact on projects currently in process.
“If we see things dipping below $80, this may put pressure on investment, but we have some way to go before we hit this mark.”
He was speaking after the boss of Royal Dutch Shell said oil prices would weaken further in the second half of this year as demand reacts to a slowing global economy and international political tensions ease.
Peter Voser, the Anglo-Dutch company’s chief executive, also predicted the pace of oil demand would recover slowly next year – putting upward pressure on prices.
Brent Crude was trading at around $99 a barrel yesterday, having on Monday hit a 16-month low of $95.63 – well off a peak of more than $128 in March.
Demand expectations have been hit by continuing problems in the eurozone and also the International Energy Agency (IEA) saying that oil prices still pose a threat to the global economy.
Mr Reid said he had similar expectations to Mr Voser, adding: “It’s quite possible and prudent to expect that weakening oil prices will factor for much of 2012. However, in the medium to longer-term, demand will increase and put upward pressure on oil prices as economies recover and continue to grow.”
Mr Reid said commodity prices would always fluctuate in the short term as there were so many “variables”, including political tensions and economic factors, involved.
He added: “The biggest concern in the market right now is the potential fallout from the weakening eurozone economies and the potential impact of Greece being forced out of the single currency.
“This, added to slowing economic growth in China and other emerging economies, is putting downward pressure on oil prices.”
Global oil demand growth this year may fall short of its forecast 800,000 barrels per day, the IEA said yesterday.
Maria van der Hoeven, the agency’s chief executive, added: “We still confront a situation of near- triple-digit oil prices.
“This is placing a huge burden on budgets and that’s contributing to the risk of further economic slowdown.”
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