Oil executives gloomy on oil price

During the World Petroleum Congress in Istanbul earlier in July, several oil industry chief executives expressed a view that oil prices are likely to remain depressed for several years, according to reports from SeekingAlpha and Bloomberg.

According to a SeekingAlpha report BP CEO Bob Dudley, reflecting on whether the oil market is in balance, commented that his company is planning on $50 oil for the next five years.

“I think everyone uses the word balanced and they forget that it means different things to different people,” Dudley said. “To me it means on a daily basis production and demand is equal. So on a daily basis the market is balanced, it’s just the inventory levels in the world that are so high.”

Bloomberg said that Dudley had argued for the need for spending discipline.

“As companies we have to remain very disciplined about spending and not assume that the price will go up,” Dudley said. “The years of $100 oil will turn out to be an aberration. We used to make money at $40 oil, we used to make money at $25 oil.”

Bloomberg reported that Total CEO Patrick Pouyanne and Mark McCollum, head of Weatherford International, both commented that it would take at least until the end of the decade for better times to return to the oil industry.

“In terms of the magnitude of damage this is by far the worst (industry downturn),” McCollum said. It may take until 2020 for demand growth to accelerate sufficiently, he said.

“Lower for longer is the new normal,” said Lorenzo Simonelli, CEO of Baker Hughes.

Stephen Greenlee, president of ExxonMobil’s exploration unit, said that his company is assessing which projects will be most resilient in the continuing oil-price slump, Bloomberg reported.

- ALAN BAILEY