Zhitong Financial APP has learned that the European energy giant$Shell PLC (SHEL.US) $Ben van Beurden, chief executive, said on Wednesday local time that the global oil and gas market would enter a "period of turmoil" and supply constraints would continue for some time due to a serious shortage of spare capacity available. Van Beurden said that despite the challenges posed by factors such as the economic downturn and the COVID-19 epidemic, global demand for oil and gas was still recovering and the world refining system was running at full speed, which was pushing up refinery profit margins and prices of refined oil products such as gasoline and diesel.
Russia is understood to have restricted gas supplies to Europe, forcing some European buyers to switch to LNG imports and raising concerns about tight supplies ahead of the peak of demand this winter. "it is impossible to cover all Russia's pipeline natural gas production capacity with LNG," van Beurden said.
Shell's chief executive said that while Europe could extract an additional 50 billion cubic metres of gas a year from the disputed Groningen gas field in the Netherlands, this would be the Dutch government's last resort.
Van Beurden is also not optimistic about the outlook for the oil market. He believes that OPEC's spare capacity is not as much as the market thought or hoped, and the market demand has reached the level before the COVID-19 epidemic and will continue to grow for several years.
The chief executive also pointed out that investment in the oil and gas industry has decreased by about $1 trillion in the past three years, so oil and gas supplies will remain tight in the future.
Shell CEO also warned that oil prices would face upward pressure in the future, given that OPEC's spare capacity was smaller than market expectations, adding that capping Russian oil prices might not work if only the US and Europe participated in oil price sanctions. Van Beurden said it was too early to draw conclusions about measures to impose a cap on Russian oil prices, but it would not work if only the US and Europe were involved, and the mechanism would work only if countries outside Europe and the US were widely involved.
$Exxon Mobil Corp (XOM.US) $CEO Darren Woods's recent statement is basically in line with van Beurden, but Woods also stressed that energy prices are likely to continue to rise, and the solution to high oil prices is high oil prices.