By Ijeoma Agudosi/Yemsi Izuora-Lagos
Shale oil production is said to be going up to 3.5 million barrels per day and has created a glut in the Atlantic basin, according to Alex Schindelar, Dubai bureau chief of Energy Intelligence.
He said countries that export oil to the US such as Algeria, Nigeria, Angola, Libya are finding fewer markets in the US.
“This is resulting in a massive shift in the flow of North African and West African crude, which used to go to North America and is now being redirected to other places.
They are finding markets in Europe and some in Asia,” he said.
“As that oil flows into Asia, it is displacing other barrels coming from the Middle East, especially from the Gulf. Saudi Arabia, Kuwait, the UAE, Iraq and Iran.
These countries are finding more competition for their crude in Asia where they didn’t see that before,” Schindelar said.
Gulf News reported that a drop in oil prices is partially due to change in trade flows and also because growth in demand has not been as expected.
“There is a big surplus of oil and lacklustre demand. Those two things put together pushed down prices today,” he added.
The development of US shale gas has grown to such an extent that the production is between 70 and 80 billion cubic feet per day, which is four times the size of what Qatar produces.
“That is a major gas production. There is too much gas in the US. They can’t use all that gas. They are building Liquefied Natural Gas terminals and are looking at Asia for the market.
A lot of Asian consumers are interested in the US gas because the price is very attractive, Schindelar said.
“2014 was a critical year. People didn’t see the oil prices fall. The energy industry is going through a major change. They have to adjust to new situation.”
Internationally, shale gas and tight oil production are in their infancy. The only countries besides the US that are producing shale gas and tight oil are Canada and Argentina.
The US produces 3.5 million barrels per day, Canada 300,000 barrels per day, and Argentina 20,000 barrels per day.