World oil situation brings new dilemma

Press, 2 June 1982, Page 10

World oil situation brings new dilemma

PA Wellington Governments and oil companies face a new dilemma over planning in light of uncertainties about the world oil situation, according to the managing director of Shell (N.Z.), ■ Ltd, Mr Robert Broughton. Speaking to a lunch time meeting of the British Trade Association in Wellington, he said recent weeks had seen the collapse of several alternative energy projects in the world, including synthetic fuel plants.

This was because they were being squeezed at both ends — on one hand by sharply escalating costs for such capital-intensive projects, and on the other by the decline in rear terms for-oil prices on the world market. . But Mr Broughton said it was still necessary for governments and companies to involve themselves in finding alternative energy sources; He predicted that the decline in world demand for oil would turn again within the next few years, and that 1984 could see another significant bout of oil price increases. Mr Broughton said these were personal views and should not be taken to mean that his company believed this would happen. Views on the oil situation differed widely throughout the industry, even within companies themselves. He said there was some speculation that the Organisation of Petroleum Exporting Countries could break up soon because world demand had fallen so much that

production in some O.P.E.C. countries was not ’ high enough to sustain their economies. O.P.E.C. production was now. running at 17 million barrels a day, down from 24 million last year, 27 million in 1980, and 30 million in 1979. O.P.E.C. nations such as Nigeria were in particular economic trouble because of this fall-off. However, Mr Broughton said he believed that it was most likely O.P.E.C. would

hold together, and even if it did break up now it would reform as soon as conditions improved. He said he believed the Western recession would come to an end, and when tha thappened the demand for oil would rise, and O.P.E.C. would again emerge as the significant oil force. Mr Broughton said that under these conditions oil prices could be expected to rise again, probably by'about 1984.