CAIRO: Egypt’s Petroleum Minister Sameh Fahmy warned Tuesday of a possible spike in oil prices spurred by falling investments and delays in energy sector projects because of the global economic crisis.
Oil could top $200 per barrel, Fahmy said at the opening address of the fifth annual InterGas conference.
Many in the industry are concerned that demand will exceed supply as world markets slowly recover.
Fahmy said that global investments and contract signings had fallen sharply over the second half of 2008 as crude collapsed from a record high of almost $150 per barrel and banks, struggling to remain solvent, sharply reigned in lending, reported the Associated Press.
But oil and gas production costs had only dropped by 5 to 10 percent.
Fahmy opened the exhibition, which opened unofficially to local and international attendees in the morning, just after returning from talks with Italian Prime Minister Silvio Berlusconi in Sharm El-Sheikh.
“We are in a period of extreme slowness on the global level, Fahmy said, adding that crude prices could skyrocket if investments are not sustained.
Crude could go to “over $200 (per barrel) in a period of two or three years if we don’t all act quickly now, AP quoted Fahmy as saying.
Fahmy’s remarks began after a word of welcome from Egypt International Fairs Chairman Ahmed Shiha, who provided background on the conference aims and thanked international and local attendees for their support.
Minister Fahmy was given a gracious introduction by Master of Ceremonies Eithne Treanor, who outlined his accomplishments over 10 years as minister of petroleum, which include promoting producer-consumer dialogue, building Egypt’s oil and gas sector from a $300 million business to a $3 billion industry, and championing the cause of cooperation between OPEC and non-OPEC oil and gas producing countries.
In his speech, Fahmy spoke of his plans for Egypt’s energy industry into the future, and underlined the importance of cooperation between Egyptian and international companies in developing the sector.
He acknowledged the slowing growth in the industry caused by the financial crisis, but expressed optimism about prospects of recovery by the end of this year and into 2010.
The minister called upon conference attendees to generate ideas and strategies for building Egypt’s future in oil and gas.
“I want to hear suggestions from everyone here on how to proceed into the next period of Egypt’s energy development, he said.
After his speech, Fahmy was presented with an award from the InterGas conference for his commitment and support to the conference and the national oil and gas sector as a whole.
Before proceeding downstairs with the minister for the official opening of the exhibition, several brief talks were offered by international industry leaders.
Speakers included president of BG Egypt Tim Blackford, President of Dana Gas Egypt Hany El-Sharkawi, ENI General Manager Adriano Mongini, Chairman of BP Egypt Hisham Mekawi, Shell Country Chairman Ahmad Atallah, Chairman and Managing Director of GAIL India U.D. Choubey, and OAO Novatek First Deputy Chairman Mikhail Popov.
The speakers outlined the accomplishments of their respective companies in Egypt’s oil and gas sector, and expressed hope for productive cooperation into the future.
Italian energy giant Eni and Egypt’s Petroleum Ministry announced new initiatives aimed at developing oil and gas reserves in the country, AP reported. They included a 10-year extension of the license for the giant Belayim field in which Eni operates with a 100 percent stake and evaluating various alternatives for the defining of a commercial framework to allow the development of natural gas at high depths.
Eni said in a statement that the gas initiative was aimed at meeting growing Egyptian demand and “optimizing export opportunities. It also said it was committed to spending $1.5 billion in five years in investments, operating costs and other efforts in Egypt.
BG’s Tim Blackford said, “Our policy is to make sure the goals of our business plan coincide directly with the government’s long-term aims for the sector. We’ve found that this strategy produces the best results all around.
He also discussed plans to “get with our partners to sanction a further $1 billion investment this year and potentially a $2.5 billion project commencing next year, reported AP.
Concluding the panel discussion, Fahmy sounded another stern warning, saying that while the world can cope with challenges and recover from the current recession, the oil industry cannot handle delays in investment.
“If we are late, the bill will be high for all, Fahmy said. -Additional reporting by AP.
