London (Platts) – The oil exporting member countries of OPEC are unlikely to be caused problems by the rising production of shale oil in the US, the group’s secretary-general Abdalla el-Badri said Tuesday.
Speaking at the annual Oil & Money conference in London, Badri noted that shale oil production, which has risen rapidly in recent years and caused a drop in US imports of crude, had relatively high production costs.
“I don’t think..with this quantity that OPEC is in trouble,” Badri said, referring to expectations of some 2 million b/d of tight oil production from the US.
Badri said OPEC was not particularly concerned about US shale oil as it is expected to peak in 2018 before declining. “This tight oil is hanging on the cost (of production)…if the price of oil drops to $60-70/b, it will be out of the market completely,” he said.
Speaking at the same conference, Fatih Birol, chief economist of the International Energy Agency, also played down the impact of US shale oil production on OPEC.
“I do not think it is a life-threatening development (for OPEC) what is happening in the United States,” said Birol.
“The Middle East is, and will remain the heart of the global oil industry for many years,” he said.
US crude oil production stood at 7.487 million b/d in July, according to the US Energy Information Administration, up from an average of 5.652 million b/d in 2011.
At the same time US crude imports have been falling. Imports amounted to 8.071 million b/d in July, according to EIA data, down from 8.935 million b/d in 2011.