- Title: AUSTRIA-OPEC OPEC oil ministers meet in Vienna
- Date: 4th June 2015
- Summary: VIENNA, AUSTRIA (JUNE 4, 2015) (REUTERS) ****WARNING CONTAINS FLASH PHOTOGRAPHY*** WIDE OF HOFBURG PALACE IN CENTRAL VIENNA OPEC SECRETARY-GENERAL, ABDULLAH AL-BADRI, GETTING OUT OF CAR AND ENTERING HOFBURG PEOPLE PASSING BY SIGN READING (English): "OPEC SEMINAR REGISTRATION" STATUES ON HOFBURG BUILDING FACADE VARIOUS OF SAUDI ARABIA'S OIL MINISTER, ALI AL-NAIMI, ARRIVING
- Embargoed: 19th June 2015 13:00
- Keywords:
- Location: Austria
- Country: Austria
- Topics: General
- Reuters ID: LVA10QDIIPRSHJ5CR7RSEL5382L2
- Aspect Ratio: 16:9
- Story Text: Oil ministers from the Organization of the Petroleum Exporting Countries met in the Austrian capital Vienna on Thursday (June 4) where they discussed the effects of reduced investment in the industry.
Qatar oil minister, Mohammed al-Sada, told the meeting how the recent record low oil prices have had a serious effect on reducing global investments in the oil and gas sector.
"Under the current oil market conditions, which has risen just a few months back from the rock bottom level of $45 per barrel, most of operating companies have reduced investment for this year," al-Sada said.
"It is estimated that while big companies have cut down expenditure by 10 to 15 percent, many smaller companies have reduced it by 30 to 40 percent and the total expenditure differed amounts to about a staggering $125 billion," al-Sada added.
Also attending the meeting were executives of the world's biggest energy groups.
Chief Operating Officer of French oil major Total, Patrick Pouyanne, said although his company planned to reduce fresh investments by 10 percent, it still plans to go through with its larger projects, worth up to 24 billion U.S dollars.
"Oh you know, we are a large, major, company... We can stay the course... We have diminished our investments by 10 percent. We still invest 23-24 billion dollars, which is a large amount of money, so all our big projects are continuing, will be developed, we have big programmes... In our industry, it's a long-term industry, we need to keep the vision, and so I'm maintaining most of my projects, all the big projects will be put through by 2016-2017," he said.
Some analysts also voiced optimism on Thursday, saying that the investment would surely follow once the oil prices start rising.
"I think the effect of reduced capex (capital expenditure) in the oil and gas space is going to have a more immediate term impact. I don't necessarily think that these prices will remain this low for a long period of time and as prices rise, which I think will happen as the global economy recovers. I think you're going to see investment come back in this space. Not very quickly, but perhaps more quickly than we would in the past," said Jason Schenker, an oil industry analyst.
Oil prices steadied on Thursday as a weaker dollar offset worries over a global supply glut ahead of a meeting on Friday (June 5) of OPEC oil producers.
The Organization of the Petroleum Exporting Countries (OPEC) is widely expected to keep a group output target of 30 million barrels per day (bpd), despite calls from some producers to cut supply to support prices.
With oil prices having stabilised, at around $65 a barrel, some $20 above their January lows, there's little appetite within OPEC to modify production limits.
Iraqi oil minister, Adel Abdel Mahdi, told reporters that the current price targeted by OPEC is fair.
"Well, in the actual situation - I'm not talking in any other situation - but in the actual situation I think this is a just price," said Mahdi.
The cartel is now pumping about 2 million bpd more than needed, analysts say, feeding a glut that has left millions of barrels in storage and kept prices at close to half their peak levels last year.
Strong global fuel demand has helped support oil prices despite the glut. In China, almost 2 million new cars are sold every month despite its economic slowdown.
The ministers are meeting ahead of OPEC's bi-annual meeting which will take place in Vienna on Friday. - Copyright Holder: REUTERS
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