OPEC Bonds With U.S. Shale Over ‘Dangerously’ Low Oil Spending

The theme of spending that’s insufficient to keep pace with strong global demand was a recurring one during the first day of CERAWeek by S&P Global, a major industry conference taking place in person for the first time in three years.

The event is happening against a backdrop of surging oil prices as buyers and traders worry Russian supplies may be subject to government sanctions because of the war in Ukraine. Brent crude hit a 13-year high Monday.

“Theres no doubt we need to engage the investment community, the financial community, to address the encumbrances that are turning out to be obstacles on our way to access capital,” Barkindo said in an interview following the dinner meeting.

“The world is gradually but dangerously running out of spare capacity which is the insurance buffer which is absolutely necessary for industry and for the world,” he said. “This is a function of the massive underinvestment in the industry in the last 10, 15 years.”

He said the Organization of the Petroleum Exporting Countries is “on the same page” as U.S. shale. In previous years, both groups have eyed each other warily or engaged in outright competition for market share.

But Barkindo struck a wistful tone after the dinner, which was attended by U.S. industry figures including EQT Corp. Chief Executive Officer Toby Rice, Hess Corp. CEO John Hess, Chesapeake Energy Corp. CEO Nick Dell’Osso, and Credit Suisse Group banker Tim Perry. The shale executives could be seen through the restaurant’s windows applauding Barkindo as he was presented with a bottle of Barnett shale. For Barkindo, a Nigerian, it was his last OPEC-shale dinner as secretary general. Kuwaiti oil executive Haitham al-Ghais succeeds him in the role in July.

“We went down memory lane,” Barkindo said. When he first came to CERAWeek several years ago, “I was not optimistic that I would be welcomed, listened to.” But, he added, “we realized that we had more that binds us together.”