Sunday, 19 September 2010

Easy oil over - time for prices to go up

"With the age of easy oil over, and the consequent higher costs of new supply, the challenges of matching supply and demand are not likely to decrease." - Andrew Gould, Schlumberg

Andrew Gould, CEO at Schlumberg

One of the biggest oil service companies in the world, Schlumberg, is forecasting good business for it's own operations in the coming years.


As explorations and reserves are dwindling down, the oil supply has to be produce from an ever increasing number of wells from ever increasingly difficult places like deep-water wells.

Most big international oil companies do not have the equipment and expertise on this and rely on companies like Schlumberg to actually produce the oil out of the ground. The same is also true increasingly for the national oil companies, that have to turn more and more towards international oil service operators in search of skilled manpower.

All this is good if you want to invest in oil service sector. However, Schlumberg's oil service CEO also reminds us that the oil price has to go higher for the industry to manage the costs of finding and producing the oil that the world requires.

Yes, it is possible that Mr Gould is talking his own book, but he also has one of the most realistic views onto what is actually needed to produce the oil.