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A sharp decline in oil and gas exploration because of the global credit crunch will lead to another spike in prices, probably within the next four years, a leading energy finance consultancy said on Tuesday.
Christopher Moyes, president of Dallas-based Moyes&Co. Inc, which manages acquisitions and investments for dozens of medium-sized oil and gas companies, said the spiralling cost of capital over the last year has slashed the number of exploration projects and hit the value of potential oilfields.
As the cost of financing all projects has escalated, oil companies are turning their backs on risky exploration and are instead under pressure to obtain hydrocarbon resources through the easier route of mergers and acquisitions.
"It is bound to lead to a supply crunch," Moyes told Reuters in an interview. "Sometime between 2013 and 2016 we will have another price crunch. The last three price spikes have had a lead time of about 1,500 to 2,500 days. The bottom of the price trough was January. It is about 1,500 days until where we run into the supply crunch again, when demand rises and we can`t supply."
"The problem will be a demand issue out of China and India, putting pressure on the market, causing prices to go up and we won`t be able to turn the taps on fast enough."
Read the full article here.
Christopher Moyes, president of Dallas-based Moyes&Co. Inc, which manages acquisitions and investments for dozens of medium-sized oil and gas companies, said the spiralling cost of capital over the last year has slashed the number of exploration projects and hit the value of potential oilfields.
As the cost of financing all projects has escalated, oil companies are turning their backs on risky exploration and are instead under pressure to obtain hydrocarbon resources through the easier route of mergers and acquisitions.
"It is bound to lead to a supply crunch," Moyes told Reuters in an interview. "Sometime between 2013 and 2016 we will have another price crunch. The last three price spikes have had a lead time of about 1,500 to 2,500 days. The bottom of the price trough was January. It is about 1,500 days until where we run into the supply crunch again, when demand rises and we can`t supply."
"The problem will be a demand issue out of China and India, putting pressure on the market, causing prices to go up and we won`t be able to turn the taps on fast enough."
Read the full article here.