World Energy Resources | 2016

WORLD ENERGY COUNCIL | OIL
fall in basic commodities subsidy and decreased commitment to its foreign allies (Egypt,
Lebanon and Palestine) as a result of a deficit equivalent to 15% of its GDP 3 .
Increased future uncertainties have led to revisions of price forecasts by several oil companies
and research firms. The World Bank’s price forecasts for 2016 for Brent and WTI crude stand at
US$40/bbl and US$38/bbl respectively and US$50/bbl and US$47/bbl for Brent and WTI crude
for 2017. Crude surplus is set to gradually decrease as a result of increased world demand
reaching a deficit of 0.13 million barrels in the third quarter of 2017.
Developments in unconventional oil (shale, heavy oil, light tight oil/LTO and tar sands), deep
offshore exploration and increased number of mature fields, coupled with the need to optimise
on the operational efficiency in order to minimise costs, has necessitated the advancement in
technology within the oil industry. Such technologies include greater use of digital technology in
oil fields, nanotechnology, real-time drilling optimisation, integrated reservoir modelling, in-well
fibre optics and diagnostics are trends to watch.
Pressure increased to act in response to climate change and the oil industry seized this game
changing development. e.g. the heads of BG Group, BP, Eni, Pemex, Reliance Industries,
Repsol, Saudi Aramco, Shell, Statoil, and Total (members of the Oil and Gas Climate Initiative
– OGCI) pledged their support in achieving COP21 objectives a month before the Paris
meeting. All IOCs appear to have started to factor in the risks relating to climate change in their
annual statements and regulatory filings.
Despite the temporary price drop, the fundamentals of the oil industry remain strong, its
response to clean energy investment growth in China, Africa, the US, Latin America and India,
is seen to be robust and positive. Substitution of oil in the transport sector is not yet imminent
and broader economic and demographic trends confirm that oil will continue to play a crucial
role in the energy system 4 .
3
Guardian (2015)
4
IEA (2016)
6