The US shale sector is in a "dire" position and will find it hard to raise production enough to address global demand growth, in part because of supply chain headaches prompted by Covid-19, according to Occidental Petroleum.
"We are in a dire situation," chief executive Vicki Hollub told CERAWeek by S&P Global conference today in Houston, Texas. "We have never seen a scenario where we need to grow production when supply chains in every industry are being impacted by the pandemic."
Russia's invasion of Ukraine on 24 February has sparked concerns over an already tight crude market and sent prices up to 14-year highs this week. New supply opportunities have opened as buyers and governments turn away from Russian exports amid the invasion, while Opec+ earlier this month decided against raising production beyond 400,000 b/d monthly production increases already in place.
But the pandemic has left the US shale sector in no position to add supply of its own as companies struggle to access people and equipment needed to drive growth, Hollub said.
"Everybody came into this year just wanting to keep production pretty much flat and nobody really prepared in advance for significant growth coming over this year as a part of the recovery," Hollub said.
"And if you did not plan for growth, you are not going to be able to achieve growth today."
