- Employment in oil and gas down by 26% worldwide
The Organisation of Petroleum Exporting Countries (OPEC) has expressed the hope that oil prices will rise in September through December, following expectations of higher oil demand.
OPEC president, Mohammad Al-Sada, who made the projection, yesterday, also disclosed that an informal meeting of OPEC member countries was scheduled to take place on the sidelines of the International Energy Forum, a gathering of producers and consumers holding in Algeria from September 26-28 this year.
Al-Sada, who also doubles as Qatar’s Energy Minister, in a statement, said since February 2016, oil prices had experienced a steady improvement following a decline in crude oil production, supply outages and a decrease in oil inventories, while the global demand for oil improved in that period.
Al-Sada said that the recent decline observed in oil prices and the current market volatility is only temporary.
“These are more of an outcome resulting from weaker refinery margins, inventory overhang – particularly of product stocks, timing of Brexit and its impact on the financial futures markets, including that of crude oil,” he said.
OPEC basket price yesterday stood at $40.08 a barrel, compared with $39.60 on Friday, while Brent crude opened around $42.
Al-Sada explained further that the economies of major oil consuming countries are expected to improve, which in turn will augment oil demand in the coming quarters, especially in preparation for the approaching winter season in the northern hemisphere.
This expectation of higher crude oil demand in third and fourth quarters of 2016, coupled with decrease in availability, is leading the analysts to conclude that the current bear market is only temporary and oil price will increase during later part of 2016.
Al-Sadah, noted that investment was needed not only to meet the growth in demand but also to stem the natural decline of oil production from operating wells.
In a related development, the decline of employment in oil and natural gas production across the world has been put at 26 per cent between 2014 and 2016. This is according to data from the United States (US) Energy Information Administration (EIA).
The report, which is for the period between October 2014 and May 2016, indicated that employment in oil and gas production was 538,000 jobs in October 2014, but had declined by 26 per cent, a loss of more than 142,000 jobs.
The EIA jobs data said the total decrease in jobs is nearly three times the 51,000 jobs lost over a 13-month period during the 2008-09 recession, saying “the majority of the jobs are actually for extraction or support activities, which include the operations of drilled wells, exploration, excavation, well surveying, casing work, and construction. This also includes the maintenance of already producing wells.”
“The effects of the reduction in drilling and employment in the industry have been relatively modest, with production levels in May down by 6 percent and 1 percent respectively. This is relative to their level in May 2015.
“Compared to October 2014, the peak month for employment in the sector, May 2016 crude oil production was two percent lower, while natural gas production was flat.”
“Divergence between trends in rig counts and employment on the one hand and oil and the trends of natural gas production on the other are attributable to increases in production per new well in key regions, driven in part by advances in sitting and drilling technology.
“For instance, new-well oil production per rig so far in 2016 has been more than twice its 2013 level in areas such as the Bakken, Eagle Ford, and Permian. Growing offshore crude oil production in the Gulf of Mexico has also helped to offset declines in Lower 48 onshore production,” the report said.
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