Volume 2, issue #12 - 02-05-1997

Apr. 15, 1997 Managing excess capacity is the most immediate challenge for the global oil industry and one that will be around for the next decade, Shell Malaysia chairman Megat Zaharuddin M.M. Nor said recently."So long as this excess capacity remains - and Shell can easily envisage it could remain for another 8 to 10 years - there is no reason to expect oil prices to move out of their range of $ 14 to $ 20," he said.
Speaking to the Asia-Pacific Conference, he defined excess capacity as the industry's ability to produce and transport gas, oil and coal, refine crude oil and generate electricity in excess of market demand. Megat said the immediate future would also be defined by the liberalisation of global energy markets from traditional state monopolies to private deregulated markets, emphasising "competition from gas which now has 15 % of the market."
"The cleanliness of gas and its superior energy efficiency as a power generation fuel could mean demand in the greater Asian area increasing by some 2.5 % a year - slower than the past 40 years but resulting in a near doubling of consumption by 2020. "Our latest scenarios also suggest that oil consumption could rise by 2 %. In this scenario, we would require additional supplies of 25 mm bpd the year 2010 and over 40 mm bpd by the year 2020," he said.