CERAWeek 2022 – With Russian Oil Ban, Energy Officials Tell Governments “Work With Us”
RIYADH: As crude prices rise above $125 a barrel, oil company executives at CERAWeek in Houston have called for a more supportive global government energy policy to help the industry resolve the looming supply crisis. is aggravated after the invasion of Ukraine by Russia.
On Tuesday morning, President Joe Biden announced a US ban on Russian oil and other energy imports, while Britain said it would phase them out by the end of the year.
Oil prices are up 4% and up 30% since the invasion. Russia exports 7-8 million barrels of crude and products daily.
Even before the invasion, the oil industry had not kept pace, with demand rebounding to pre-pandemic levels. Several shale executives at the CERAWeek energy conference in Houston said the market wouldn’t have been so tight had the government been more supportive of the industry.
“We knew it was an unbalanced market and it didn’t take much to tip it one way or another,” said Ryan Lance, CEO of ConocoPhillips.
Washington should increase permits for natural gas
Scott Sheffield, CEO of Pioneer Natural Resources, said Washington should increase permits for natural gas pipelines, speed up permits for liquefied natural gas (LNG) facilities and encourage more rental activity.
Oil executives supported the ban on Russian oil, but they have criticized the Biden administration since it imposed a temporary ban on new federal permits and canceled the Keystone XL project. The administration countered by saying that shale companies are sitting on 9,000 existing permits that they have not yet used to increase oil production. US oil company executives have cut back on drilling and exploration in response to shareholder demands for higher profit margins.
US Energy Secretary Jennifer Granholm told an oil conference in December that the administration wants companies to drill more.
“We are pleased to see the administration doing all it needs to do to be effective in its attempt to end this invasion,” Chesapeake CEO Nick Dell’Osso said. He said Chesapeake had “limited or light conversations with politicians in general” as oil prices soared, but added, “We think there needs to be a lot more.”
US oil production has not been recovered
U.S. oil production peaked at nearly 13 million bpd at the end of 2019, but producers have significantly reduced activity during the pandemic, and production has not recovered, in part because oil company investors urged shale players not to spend too much.
Some shale executives have said a rapid increase in production is not likely as supply chain issues have raised costs. This points to more pain for consumers and businesses facing soaring diesel and gasoline costs.
And with major buyers effectively self-sanctioning Russia from world markets, leaders warned that there was little to replace that country’s exports and that governments needed to plan for long-term disruption. “We have to think about this in the context of more than a few months – God forbid, it’s over a year,” Lance said.
OPEC+ members struggle to meet existing production quotes
Consumer nations have been pushing for a faster increase in production from Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries and its allies known as OPEC+. But the group has limited spare capacity to produce more and some OPEC+ members are already struggling to meet existing production quotas.
The White House has also pushed to revive a nuclear deal with Iran that would add barrels to global supply.
Soaring oil prices underscore the need to accelerate cleaner energy rather than having to rely on fossil fuel markets that are “vulnerable to bad actors,” White House press secretary Jen Psaki said. in a tweet this week.
Sheffield said the industry would also have to respond on its own. “We must demand increased activity from all shale producers, both oil and gas,” Sheffield said.
900 million people do not have access to energy for their basic needs
Some 900 million people around the world, mostly in Africa, still lack access to energy for their basic needs, Nigerian Oil Minister Timipre Marlin Sylva said on Tuesday at the Energy Conference. energy CERAWeek in Houston.
“We are still transitioning from firewood to gas,” Sylva said. “Please allow us to continue our own transition.”
Other countries with oil discoveries still in development, including Ghana, Guyana and Suriname, also said they could not be expected to give up the opportunity to benefit from oil and gas. who have helped build more developed economies.
“They want all of us, including those of us without food, to bear the burden of the transition,” Nigerian National Petroleum Corporation, or NNPC, chief executive Bala Wunti told CERAWeek.
Nigeria is now facing a double whammy from high gas prices for the cooking it imports and a lack of investment in its oil industry, Minister Sylva has said, amid a global push by banks and funds to restrict investment in oil as part of a stimulus campaign. environmental, social and corporate governance.