While Hess Corporation and other majors may be cashing in big from key productive assets, global supply needs to ramp up as quickly as possible to avert further consequences of a deepening energy crisis.
This was stated on Wednesday by Hess’ Chief Executive Officer, John Hess during his company’s 2022 third-quarter earnings call.
He was keen to note that global oil demand has returned to pre-COVID levels of approximately 100 million barrels a day. As it looks to 2023, even with a recessionary environment and a slowing world economy, the CEO said Hess expects global oil demand to grow by at least 1 million barrels per day, driven by China reopening its economy and there being an increase in global air travel.
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While it is evident that the demand is present, Hess said the true worry lies with the global oil supply stock. Supply continues to struggle to keep up with demand while global oil inventories are approximately 300 million barrels less than pre-COVID levels.
He said too that there is very little spare production capacity in the world.
“Oil markets were tight even before Russia invaded Ukraine and are expected to get even tighter with the potential for further sanctions on Russian oil exports this winter. The world is therefore facing a structural supply deficit and significantly more global oil investment is needed,” expressed the Hess chief.
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According to the International Energy Agency, a reasonable estimate for the global oil and gas investment needed for supply to meet demand is approximately US$500 billion each year over the next 10 years.
Hess said the last five years have seen significant underinvestment which will tighten supply as global oil demand grows in the years ahead.
In a world that will clearly need reliable, low-cost oil and gas resources for decades to come, Hess said his company remains very well positioned to succeed with its Guyana assets.