Oil drillers worldwide experience hardest times ever: expert

Oil drillers across the world have been experiencing harder times than ever before after the oil markets began fluctuating two years ago, an energy researcher said here Wednesday.

Lars Eirik Nicolaisen, a partner at consultancy Rystad Energy in Oslo,Norway, said at the 47th Offshore Technology Conference in Houston that the oil downturn has created an unprecedented financial crisis for oil drillers around the world with a number of oil companies in North America having filed for bankruptcy.

The difference between the price of a barrel of oil and the cost to get it out of the ground had never been slimmer, said Nicolaisen.

As for the current round of low oil prices since mid-2014, he said that this is unprecedented in history and as compared with the previous ones, this oil downturn "makes some of the setbacks that we've put behind us in 2009 and the early 2000s look like a walk in the park."

From his point of view, the global oil industry has pulled back on spending more than in any previous downturn, with last year's spending reduced by 220 billion U.S. dollars and another 21 percent this year.

Oil fields across the world have dropped about 10-12 percent, but global oil production has not been reduced enough to correct the oil glut by now, he said, adding that this is because even though the oil industry has mothballed billions of barrels in oil projects, they are still spending money to pump oil from deep-water installations and other projects that were approved years ago.

Those previously approved projects added 1.7 million barrels a day to the world's oil production last year and would add another 1.7 million this year, and another 5.8 million from next year through the end of the decade.

The global oil market is expected to decline in crude production this year, and Rystad believes the world oil demand will increase to 98 million barrels a day by the end of the decade, possibly pushing crude prices back up.

He said that world oil prices need to reach at least 80 dollars a barrel for oil companies to boost investments in major projects.

Meanwhile, experts also warned that global spending on deep-water oil and gas projects has little hope for a rebound any time soon after it has dropped more than 50 percent over the past years.

Oil prices crashed from 107 dollars per barrel in June 2014 to around 40 dollars recently. Meanwhile, U.S. oil production has dropped by as much as 700,000 barrels a day and the number of rigs in the field has sunk to historic lows. By 2017, crude oil production is expected to average around 8 million barrels per day, nearly 1.5 million less than in 2015, according to the U.S. Energy Information Agency.

The 47th Offshore Technology Conference, the largest in the world, opened here on Monday with the participation of delegates from more than 120 countries and regions, including those from China's energy industry. Endi