Supply may outstrip demand in medium term

Media reports indicate that although the global demand and supply for crude oil and natural gas is in balance for the time being, in the medium term supply may outstrip demand.

In the short-run, higher production from shale in North America is being offset by substantial outages elsewhere, principally as a result of sanctions on Iran.

On the demand side, falling oil consumption in the United States and Europe is matched by steady, though moderating, growth in China and the Middle East. Therefore, global demand and supply for oil and gas is almost in balance.

But in the medium term, demand may grow at a slow pace and supply may rise faster as the 30-year high in exploration and development activity turns into more new production, reports indicate.

Much of the growth in oil and gas supplies outside North America is coming from conventional fields. But unconventional tight petroleum and deepwater resources will continue to gain in importance, according to Paal Kibsgaard, Chief Executive of field services company Schlumberger, speaking at a conference.

For unconventional resources, North America will remain the centre of activity with light tight oil being the primary objective.