(MENAFN- ProactiveInvestors) Oil markets will continue to have ample supplies in the coming years according to Goldman Sachs which sees spare capacity among both OPEC members and America’s key shale regions.
In the medium term by 2025 however the American bank reckons the world will be short of around 6.7mln barrels of oil per day.
Shale both currently un-economic projects and new discoveries will be needed to fill the gap it suggests.
The broker’s annual ‘top projects’ exercise also concluded the industry may need to discover meaningful new resources to meet demand in the coming years.
Assessing the ‘top 420’ projects the bank concludes there are 359 projects that can ‘change the world’ whereas the other 61 won’t.
“With ample supply coming from low cost production breaking even at <$60/bl or <$9.50/mcf we believe that the projects that sit higher on the cost curve are unlikely to be sanctioned unless costs can fall in excess of our current assumption”.
High cost LNG heavy oil and marginal deepwater fields are at the highest risk of being left on the drawing board according to Goldman.
It also says that regionally these projects are concentrated in Canada the US Angola and Nigeria.
These more expensive projects represent some 10.7mln barrels of ‘peak production’ per day it added.
“These projects need on average a further 24% cost reduction to be economic that we see as challenging to achieve through deflation alone.”
Future forex movements and a potential change to tax terms are identified by Goldman as two areas where things may improve in the future.
Looking at specific geographic ‘key growth’ regions Goldman identifies US Iraq Canada and Brazil. It does however warn that with Iraq and Brazil there are notable risks.
Brent crude today was a touch lower at US$66 while West Texas was flat at US$59.
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