Oil firms need to wake up to global changes in supply and demand, according to a research paper published today.
The report by Chatham House, an independent policy institute based in London, says demand for oil in traditional markets is peaking as transport users seek efficiency and alternative fuels.
It also says the “axis of the oil market” is shifting from between the Middle East and the west to farther east, creating issues around security and geopolitics.
But the report adds that new markets are opening up in areas outside traditional producing regions as unconventional resources get unlocked, thanks to higher oil prices.
John Mitchell, associate fellow, energy, environment and development programme at Chatham House and lead author of the report, told the Press and Journal the North Sea would continue to be a strong producing market despite the major shifting global trends.
But he warned: “People in the industry need to realise how much the users of oil are changing what they do.
“The US automobile industry is an illustration of that. The vehicle industry is replacing oil with more efficient vehicles and biofuels are replacing oil products as liquid fuels.
“The auto industry is ahead of the oil industry in adapting to high oil prices and carbon pricing policies.”
Mr Mitchell said new and unconventional resources were creating opportunities for private firms outside traditional exporting regions and state-controlled oil producing areas, like Opec.
He added: “That gives a new lease of life to upstream companies.”
Shifting demand was also a key change, he said, adding: “Asia is absorbing all the Middle East can produce and more, which explains why China is coming to the North Sea.”
