Tuesday, June 8, 2010

IEA: US Gulf oil output estimates face cut

KUALA LUMPUR: The International Energy Agency (IEA) may cut Gulf of Mexico oil output estimates up to 300,000 barrels per day (bpd) by 2015 on potentially tighter US laws on deepwater drilling after the BP oil spill.

"Our tentative estimates is that we will have to revise our forecasts for Gulf production for 2015 downwards. Our preliminary estimate is that we will have to cut by 100,000 to 300,000 barrels per day," Richard Jones, IEA deputy executive director said in Tuesday, June 8.

He did not reveal the existing production estimates.

The Obama administration has put on hold new deepwater exploratory drilling in the US for six months pending the findings and recommendations of a presidential commission investigating the causes of the explosion in April that sank Transocean's Deepwater Horizon rig leased by BP Plc.

The review could lead to new legislation by the US Congress. As well, the US Interior Department, which regulates exploration from oil to minerals, may also issue new safety and environmental requirements for shallow-water offshore drilling as soon as Tuesday.

"I would not be surprised if the tighter legislation would have some extra-territorial provisions. Costs will go up, investments will be affected as some projects will no longer make the cut," he told Reuters in an interview at the Asia Oil and Gas Conference in the Malaysian capital.

"This would slow the development but whether it would slow appreciably is an unknown question."

Jones also said current crude prices around US$71 a barrel would not have a negative impact on oil producers, adding that levels would keep within the US$60-US$80 range in the medium term due to ample supplies in OECD nations and spare OPEC capacity.

This would also prompt the Organization of the Petroleum Exporting Countries to maintain its production policy at its next meeting in October, he said.

"The real uncertainty is the nature of (oil) demand and the real uncertainty is the nature of the economic recovery," he said.

Jones said the Paris-based IEA, which advises industrialised nations on energy policy, is worried about the Hungary debt issue but do not think that its impact would be as serious as the 2008 financial crisis or the Greek sovereign debt woes.

"We are concerned about Hungary. We do not think the ripples will be quite as big as the first financial crisis. Hungary is a new addition to the economic system and we do not think that it has as extensive ties as Greece," he added. ' Reuters

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