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Shale oil will impact on supply admits OPEC
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Monday, 12 Nov 2012
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OPEC has acknowledged for the first time that technology for extracting oil and gas from shale is changing the global supply picture significantly and said demand for crude would rise more slowly than it had previously expected.

In its annual World Oil Outlook, OPEC cut its forecast of global oil demand to 2016 due to economic weakness and also increased its forecast of supplies from countries outside the 12 nation exporters group.

The Organization of the Petroleum Exporting Countries said that given recent significant increases in North American shale oil and shale gas production, it is now clear that these resources might play an increasingly important role in non OPEC medium and long term supply prospects.

OPEC has been slower than some to acknowledge the impact that new technologies such as hydraulic fracturing known as fracking may have on supply. Conoco's chief executive Ryan Lance has gone so far as to predict North America could become self sufficient in oil and gas by 2025.

In OPEC's new forecast, shale oil will contribute 2 million barrels per day to supply by 2020 and 3 million barrels per day by 2035. For comparison, 2 million barrels per day is equal to the current output of OPEC member Nigeria which is Africa's top exporter.

Fracking involves pumping chemical-laced water and sand into a well to open cracks that release oil and gas. The technology has transformed the production outlook in North America but drawn criticism from environmentalists, although the industry insists it is safe as long as wells are properly built.

OPEC said that in the medium term shale oil would continue to come from North America only but other parts of the world might make modest contributions in the longer term. Shale oil and gas may also play a role in OPEC members themselves.

Previous editions of the OPEC report saw no significant supply addition from shale oil. As recently as June, oil ministers including Mr Rafael Ramirez of Venezuela played down the prospects as OPEC met in Vienna for its last meeting to set output policy.

Mr Abdullah Al Badri secretary general of OPEC said in Vienna that shale oil still did not pose a threat to the group as rising demand would easily absorb the higher output. It doesn't concern us that much.

Source - Reuters

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