Energy markets have been roiled by the Ukraine war as Russia has reduced some exports and faced sanctions while Europe has announced plans to wean itself off dependency on Russian fossil fuels in coming years.
Speaking ahead of ExxonMobil’s unveiling as the fourth international partner for Qatar’s natural gas expansion, chairman and chief executive Darren Woods said major uncertainty lies ahead.
“You are probably looking at three to five years of continued fairly tight markets,” Woods told the Qatar Economic Forum. “How that manifests itself in price will obviously be a big function of demand, which is difficult to predict.”
On top of under-investment in finding new oil sources in 2014-2015, Woods said the pandemic “really sucked a lot of revenues out of the industry”.
Woods said companies and governments needed to think long-term. “We are going to see a lot of volatility and discontinuity in the market place if we don’t get to more thoughtful policies,” he predicted.
Representatives from the Middle East energy industry also renewed calls for better planning in consumer countries.
Sheikh Nawaf Saud al-Sabah, chief executive of Kuwait Petroleum Corporation, said the company was supplying all customers, but that multinational oil firms were not matching the investment of national oil enterprises.
As part of the Gulf state’s response, Kuwait was starting its first offshore oil exploration and building the world’s biggest oil refinery.
“We have never touched the offshore in Kuwait. The first offshore drill rig arrived in Kuwait a week ago and will start soon,” he said.
The new refinery would come online by the end of 2022, Sabah added.
“It will be the largest refinery in the world at 615,000 barrels of oil a day capacity,” he said adding that it would help meet increased demand from Europe and elsewhere.
Sabah said there was a “dangerous trend”, with world consumers wanting energy but not being prepared for the change from polluting hydrocarbons to green energy.
“That is a paradox here that is causing quite a tremendous disruption in the investment cycle. We are making the long-term investments, but not international oil companies.”
Sabah said the world currently produces and consumes about 100 million barrels of oil a day but that the equivalent of Kuwait’s production — about 3.5 million barrels a day — was being lost through declining fields.
Qatar’s Energy Minister Saad Sherida Al-Kaabi meanwhile criticised the “demonisation” of oil companies, and the windfall taxes on oil majors that many governments are proposing.
“I don’t see the governments coming to pitch in when they (oil companies) were losing money and borrowing when the oil price was negative in Texas,” he said.
ExxonMobil has taken a 6.25 percent stake in the expansion of Qatar’s North Field, which contains the world’s biggest natural gas reserves.
The stake is the same as France’s TotalEnergies while Italy’s Eni and US firm ConocoPhillips have 3.13 percent shares.
Woods said the project will “bring balance to the global market”.