Oil Producers Can Solve Supply Woes: Exxon CEO
Oil producing countries need to remove barriers to investment to ensure global oil markets are well supplied, but they are unlikely to do so as long as prices remain high, Exxon Mobil's CEO said Tuesday.
Rex Tillerson told Reuters the world's ability to meet oil demand hinged on political, rather than geological, uncertainties.
"If governments are unhappy with the current supply-demand balance, they can change it," he said in an interview.
OPEC President Chakib Khelil had earlier told the World Petroleum Congress, which is being attended by about 3,000 industry executives, that producers shared consumers' dissatisfaction with high oil prices, which hit a record above $143 per barrel on Monday.
OPEC blames speculators, rather than a shortage of supply capacity for high oil prices, but on Monday the CEOs of Royal Dutch Shell , Britain's BP and Spain's Repsol blamed instead a dearth of new supplies.
Tillerson said there was one way for states endowed with oil to ensure future supplies meet demand.
"Allow your resources to be developed to meet the world's energy needs," the CEO of the world's largest publicly traded oil company by market capitalisation urged.
Ninety percent of global oil reserves are in countries, such as Saudi Arabia and Kuwait, that restrict investment by international oil companies, Repsol CEO Antonio Brufau said.
Oil companies have long sought more access to the rich fields of OPEC members without much success. A recent oil price surge has only increased pressure on OPEC to boost supplies.
"We want them to allow our efficient oil companies to have a role to play in the oil production of the oil producing countries," British Prime Minister Gordon Brown said at an emergency oil summit between producers and consuming nations in Jeddah in June.
Tillerson said producing countries that limit investment had little incentive to lift barriers when oil prices were high, even though the price rise was a clear market signal that such measures to boost supply were needed.
"When the prices are high, the national governments ... don't see a need for an IOC (international oil company). They don't recognise the value an IOC brings," he said.
Tillerson said while Saudi Arabia was working hard to boost spare capacity, more could be done in OPEC to boost output.
He noted the oil cartel plans to invest $210 billion in oil production and refining in the coming five years while Exxon plans to invest $125 billion over the same period.
Royal Dutch Shell is expected by analysts to invest even more than Exxon .
Tillerson said every country had a reason for putting bars on investment by oil companies and that even the United States was guilty of unnecessary restrictions.
U.S. barriers were largely environmental, he said, but he added public mood was moving toward allowing drilling in areas now off limits to oil majors due to environmental concerns.
He said outdated environmental attitudes were the reason for opposition to drilling in areas such as the eastern Gulf of Mexico and the Arctic National Wildlife Refuge.
"We're stuck in this emotional, environmental past ... Public sentiment in the United States seems to be shifting," he told Reuters.
"The American people are kind of sick and tired of these prices." Tillerson earlier told a news conference that Kazakhstan was holding up development of the giant Kashagan oil field through disputes with companies working on the field.
Tillerson said he understood Alaskans were disappointed by the U.S. Supreme Court overturning a $2.5 billion punitive award for the Exxon Valdez oil spill, but hoped the ruling would not mar the company's relationship with the state.
He does not expect another round of oil mega-mergers even though size is becoming increasingly important as oil majors focus on complex projects costing tens of billions of dollars.
"There is a true benefit to scale in this environment we're in," he said.
Deals like Exxon's tie-up with Mobil and BP's takeover of Amoco in the late 1990s were now unlikely because European and U.S. regulatory rules would block them.
"I'm not sure there's a lot of appetite to provide for consolidation," he said.
Tillerson refused to predict where oil prices were heading but dismissed talk that oil prices would stay high, adding his experience of previous slumps influenced how he runs Exxon.
"I also remember the crash in oil prices in 1982/83 when we lost 400,000 people out of the industry in the United States. It was painful," he said solemnly. "I had to let a lot of those people go. And those things, you don't lose sight of them easily."