JEDDAH: The oil and gas industry has canceled around $200 billion of investments this year, with energy companies planning to cut another 3 to 8 percent from their investments next year, marking the first time since the mid-1980s that industry cut the spending for two consecutive years, Prince Abdulaziz bin Salman, deputy minister of petroleum and mineral resources said on Monday.

The last few months have been, without doubt, very unusual, if not unique,
for the oil market. After years of relative stability, the oil price
started falling in the second half of 2014, losing more than 50 percent of
its value in a relatively short period of time.

Just like high oil prices can’t last, a prolonged period of low prices is “also unsustainable, as it will induce large investment cuts and reduce the resilience of the oil industry, undermining the future security of supply and setting the scene for another sharp price rise,” Prince Abdulaziz said at the 6th Asian
Ministerial Energy Round Table in Doha. “As a responsible and reliable producer with long-term horizon, the Kingdom is committed to continue to invest in its oil and gas sector, despite the drop in the oil price,” he said.

Prince Abdulaziz said: “Despite all the macroeconomic uncertainties engulfing the global economy, oil demand continues to grow at a robust pace and set to increase by 1.5 million bpd in 2015, the strongest growth seen in the past few years. This is in contrast to the early 1980s where global oil consumption fell between 1980 and 1984 by more than 2.3 million bpd.”

He said to meet the expected increase in demand, the world needs all sources of energy — including oil, gas, renewables, nuclear, and solar. The Kingdom has always been of the view that there are plenty of resources to meet the projected increase in demand.

Prince Abdulaziz said: “After three years of positive growth, non-OPEC supply is expected to fall in 2016; only one year after the deep cuts in investment.”

He said Saudi Arabia plays, and will continue to play, a proactive role in
stabilizing oil market conditions by building on its close relationship and
ongoing cooperation with both producers and consumers, and through its
effective and constructive engagement in OPEC and The International Energy Forum.