[DOHA] Leading crude oil exporter Saudi Arabia warned on Monday of a supply crisis after massive energy investments were cancelled because of the sharp decline in oil prices.
"Around US$200 billion of investments in energy have been cancelled this year," Saudi vice minister of oil Prince Abdulaziz bin Salman told a roundtable meeting for Asian energy ministers in Doha.
He said energy companies are planning to cut between 3.0 per cent and 8.0 per cent of their investments next year.
"This is the first time since the mid 1980s that the oil and gas industry will have cut investment in two consecutive years," Abdulaziz said.
The cuts have been made by oil-producing nations and as well as oil companies in consumer countries, he said.
"The potential impact of current cuts in expenditure on future oil supplies is both substantial and long-lasting," said Abdulaziz, adding that nearly five million barrels daily of projects have already been deferred or cancelled.
Oil prices, which have been falling since the middle of last year, have already shed more than 50 per cent of their value, strongly impacting energy-reliant regions such as the Gulf.
"A prolonged period of low oil prices is 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," Abdulaziz said.
Ensuring the security of energy supplies becomes even more complicated because the available space production capacity is only two million barrels per day and all of it is held by Saudi Arabia, he said.
Oil prices rebounded Monday, but gains were capped by a strong dollar and signs of faltering demand from Asian powerhouse China.
In midday deals in London, Brent North Sea crude for December won 51 cents to US$47.93 per barrel.
US benchmark West Texas Intermediate for delivery in December rose 36 cents to US$44.65 per barrel compared with Friday's close.