Arab Today, arab today us to remain reliant on oil imports
Last Updated : GMT 19:40:07
Arab Today, arab today
Arab Today, arab today

US to remain reliant on oil imports

Arab Today, arab today

Arab Today, arab today US to remain reliant on oil imports

Abu Dhabi - Arabstoday

The United States will be able to pump nearly two million barrels per day of crude from the recently discovered shale oil but will remain heavily reliant on imports in the foreseeable future, a well-known Arab analyst has said. Walid Khaddouri, a former information director at the Organization of Arab Petroleum Exporting Countries, said the rapid rise in shale oil production has recently drawn the interest of major oil conglomerates, adding that the Obama administration has also taken special note of this industry. He said the rise of this sector also sits well with the rhetoric of “energy independence” raised by both the Democratic and Republican parties. In an article published by the Abu Dhabi-based Emirates Centre for Strategic Studies and Research, he said big oil companies like Exxon and Total have now started putting in tens of billions of dollars into buying shares in small-scale companies that preceded them in the production and exploration of shale oil. The aim of these mega corporations is not only to have a stake in these small-scale companies and to avail of the perks the latter have been receiving from their respective state governments, but also to acquire the know-how and technology they use to extract shale oil, he said. It is interesting to note that major Asian oil companies—particularly from China, Japan and India—have also taken the initiative to buy shares in these companies, he said, adding noting that environmental groups have raised their voice against the production of shale oil and have particularly attacked the manner in which shale oil and gas is extracted. Khaddouri, an Iraqi, said this has prompted authorities in certain US states to put restrictions on extraction operations. He said these restrictions have also been imposed in certain European countries, such as France which prohibited the development of this industry on its land. “Regardless of the pros and cons of the new shale fuel technology, it should be noted that the volume of oil extracted from this new source is still meager compared to total oil production, and does not have a significant impact on US oil trade itself, not to mention the global oil trade,” he said. “But it is expected that the amount of production in the US will gradually increase to approximately two million barrels per day by the end of this decade. However, the impact of this expected amount will still be limited.” He noted that this approach might give new impetus to the slogan of \"energy independence,\" as advocated by many US groups and political parties. “Nevertheless, such a policy is not likely to stop US dependence on oil imports in the foreseeable future, which currently stands at about 10 million barrels a day. However, the production of shale gas is a more interesting development when it comes to shale fuel,” said Khaddouri, a former editor in chief of the Nicosia-based Middle East Economic Survey (MEES). He said the impact of shale gas production is already palpable in the US and European gas markets, adding that the size of shale gas production today is about a third of US production, which is likely to rise in the future. “The United States, which was once the net importer of gas, has now started exporting it. However, some American organizations want a reduction in these exports as they want to lower the local price of gas,” he said. “It is also interesting to note here that liquefied natural gas (LNG) exports from the United States to Europe—Britain in particular—have reduced the price of gas imported by Europe from Russia, Qatar and North Africa. Indeed, the price mechanism has started to shift in favor of importers. This change in gas prices can be called the first global impact of shale gas on global trade, as it has introduced a new and important resource for gas at the international level.” Khaddouri said he believed the entry of large quantities of shale gas into the market, along with the expansion of production in Australia—that has made it the largest producer of LNG (liquefied natural gas) in the world with a production of 77 million tons per year—would gradually change the nature of the global gas industry and the gas pricing equation across countries. “However, it is expected that the record increase in consumption from China, South Korea and other emerging economies, will play an important role in propping up gas markets and prices.”

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