Terror, economic slump hold up oil and gas investment
Terror, economic slump hold up oil and gas investment
Martin Abbugao, Agence France-Presse, Singapore
Terrorism fears and the economic slowdown are holding up major oil and gas investments, but the longer term prospects are bright due to rising demand, industry players said Tuesday.
Worldwide demand for oil is expected to increase 60 percent in the next 25 years, with an economically buoyant Asia seen to lead the rise, speakers told an offshore oil and gas conference here.
By 2020, Asia will be the world's largest net importer of oil, surpassing Europe and North America, said Raymond Lim, Singapore's minister of state for foreign affairs and trade.
With Asia remaining a fast-growing region, "the power sector will continue to present many opportunities" for companies, he said.
However, threats of terrorist attacks highlighted by the recent bomb blasts on the Indonesian resort island of Bali, and the lingering global economic slump are keeping investors at bay.
"There's a lot of business around but nobody is signing the contracts to start the business," said Dai Somerville-Jones, chief executive of Britain's Energy Industries Council.
He said the mood at similar oil and gas conferences in Brazil, the United States and the Middle East in recent weeks was similarly somber.
"There are massive amounts of business but these are still on hold," Somerville-Jones told AFP on the sides of the OSEA 2002 offshore oil and gas conference.
At the Singapore conference and other meetings worldwide, industry players showed "enormous enthusiasm... but again everything is on hold," he said.
"So you have to ask the question why, and the answer is the world economy," he added, citing the slowdown in the U.S., Japanese and European economies.
The prospects of a U.S.-led war in the Middle East and terrorist attacks are also clouding the horizon.
"It's definitely the terrorist concern around the world. Definitely, the international scene has sort of come to a bit of a holding point whilst everybody realigns their thought process," he said.
Both Somerville-Jones and Michael Chia, executive director of Singapore oil rig maker Keppel FELS, expect the impact of terrorist threats will be short-term.
Rising demand for oil and gas will drive the sector in the medium and long terms, especially in the increasingly popular field of deep-sea exploration for natural gas deposits, they said.
"The fundamentals are supported by the fact that energy consumption continues to grow especially in the Asia-Pacific region," Chia told reporters.
"This growing trend shows a greater increasing demand for gas to be used for power generation and this will continue to fuel the development of offshore oil fields," he said.
By 2020, the demand for gas is projected to exceed the demand for oil, Chia added.
"In the near-term... the industry is in a bit of what I call a holding position... caused by recently increasingly tumultuous political and economic and corporate events around the world," he said.
"Political instability and global terrorism remain unabated and there's also the question of the pending Iraq war."
The outlook for oil prices remains volatile and this has affected the exploration and production budgets of the world's major oil companies.
Somerville-Jones said that as in the aftermath of the Sept. 11, 2001 terrorist attacks in the United States, the business will rebound.
He said British oil and gas firms remain bullish about Southeast Asia, which hosts a number of oil producing countries, and pointed to the more than 100 companies participating in the biennial OSEA conference.
"We believe that there is business here. Bigtime," he said.