Marine Industries Global Market Analysis - Marine Institute

46 MARINE INDUSTRIES GLOBAL MARKET ANALYSIS
For the past 30 years oil prices have been subject to massive fluctuations as a result of
political actions ranging from local civil disturbance to outright wars in the Middle
East.The results were the tripling of oil prices in 1973 and again in 1979.The
reaction of the oil consuming western economies has been to seek oil supplies from
other less troubled areas, resulting in the development of whole new oil production
provinces such as the North Sea. Although oil demand has continued to grow, from
some 58 million barrels per day (bpd) in 1973 to some 80 million bpd in 2004, the
proportion shipped from the Middle East has fallen as the OPEC countries lost
market share to these new non-OPEC suppliers.
Since 1973, European oil demand has grown by only 6%, the US by 16%, whilst in
the developing economies growth has been 202%.
But the picture is changing. In the North Sea and some other shallow-water offshore
areas oil & gas production has passed its peak and will soon be entering a period of
terminal decline. Coupled with other factors, the effects of supply restrictions are now
evident in prices that exceeded $53 in late 2004.
In theory, the reserves that are still available worldwide are considerable – 40 years at
current demand is much quoted, but is this true Such figures do not take into
account the problems (both technical and political) in accessing the reserves.There is
no doubt that OPEC fully realises the economic problems that high oil prices cause
its customer countries which, at their most serious, would again reduce demand.
Figure 5.1: Oil & Gas Supply Forecasts
Conventional non-OPEC oil supplies are being used up at an alarming rate and at
present OPEC countries are unable to provide much more. Politics permitting, in the
short term oil prices could moderate. But longer term, the situation for oil consumers
– in other words all of us – is not looking good.
Source:
“The World Oil Supply Report”
Douglas-Westwood Limited
NATURAL GAS AND LNG
Growth in demand for natural gas is outstripping that of oil. Gas reserves are
considerable, possibly amounting to at least 20 years more than oil.
However, these major reserves are far removed from markets and depletion of reserves
in countries such as the UK and the US means that activity is focused on longdistance
subsea pipelines.
Despite this, much gas is economically stranded and at present liquefaction offers the
only real solution. Investment in liquid natural gas (LNG) plants, LNG tankers and