Tracy Dulle, Technology Editor
DOHA, Qatar -- "Global oil demand will slowly grow, prices will rise and be volatile," said analyst John Westwood with Douglas-Westwood Ltd. to an audience at the Offshore Middle East Conference and Exhibition today in Doha, Qatar. "And the Middle East region will continue to be the largest supplier."
Westwood said the growing Middle East region will itself need vast amounts of energy, and eventually oil supplies will be unable to meet demand, causing prices to rise dramatically.
Westwood calmed fears of those dealing with the current economic conditions and falling oil prices, adding the "energy sector will remain very good as a long-term investment," the key word being long-term. On July 11 of this year oil prices hit $147/bbl, and today they are hovering around $63/bbl.
Westwood said the current situation was caused by "two decades of under-investment," and the oil and gas industry (both offshore and onshore) needs to spend $10 trillion by 2030 to get back on track.
"Global energy demand is up 37% since 1990," Westwood said, "and across the world the demand for energy was met 35% by oil."
In 2007 the average oil prices increased 58%, while companies' oil reserves fell. Another interesting note—while prices increased company revenues per barrel were the same as in 2006.
"The 'easy oil' has gone, and the remainder is in difficult places," he said, adding in the future there is going to be a time when the oilfield production decline cannot be replaced.
Westwood predicted offshore oil and gas production and spend to grow. While deepwater production shows the fastest growth, shallow water, like the water in the Middle East, is the largest offshore market.
The Middle East holds 61% of the world's oil reserves and 41.3% of gas reserves. From 9.4 MMboe/d in 2008, Middle East offshore production is predicted to soar by 46% to 13.7 MMboe/d by end of 2012.