Brazil is investing more than 200 billion dollars annually to boost its current oil production capacity of 2 million barrels per day, which is expected to reach about 5.5 million, with the development of the Campos and Sampos fields near Brazil's southeastern Atlantic coast, where drilling is underway at a depth of 1800 meters below the surface. At present, Brazil also produces around 500 thousand barrels per day of ethanol, extracted from sugarcane, of which about 100 thousand barrels per day are exported to the United States. In Australia, work is under way to increase the production capacity of liquefied natural gas, from its current level of 20 million tons per year to 80 million ton by 2019, compared to Qatar's current production capacity of 77 million tons per year (the highest in the world). Australia, which is surrounded by seas and oceans, is compelled to liquefy gas before exporting it, as exporting it otherwise through pipelines is not feasible, if not impossible. Its natural markets for exporting liquefied natural gas are the nearby Asian countries, especially China and Japan. A study recently published by the French Institute of Petroleum indicates that oil exploration and drilling projects have been on the rise worldwide since 2010. The rate of investments in 2010 rose by about 25 percent compared to 2009, especially in the Middle East and Saudi Arabia, which is working on increasing its production capacity to the level of 12.5 million barrels per day, and also Iraq, which is seeking to increase its production capacity to 12 million barrels per day in the second half of this decade, compared to its present output of 2.9 million barrels per day. This is while the rate of investments in Africa rose by about 6 percent and in Russia and the countries of the former socialist bloc by 3 percent only. However, the report adds that there are clear indications that exploration and drilling worldwide have been intensified, in tandem with higher oil prices (above the 100 dollar per barrel mark). One of the main reasons for the positive outlook in the study for 2010 is the massive size of the investments undertaken by the Brazilian company Petrobas, which has discovered giant oil fields in the Atlantic in Brazilian territorial waters. The company intends to develop these fields in the coming years, and this will render Brazil one of the important oil-producing countries in the future, in what will be a departure from a time when Brazil was a huge importer of oil. This is in addition to projects in Saudi Arabia, Iraq and Australia. In what regards the United States, despite the decline in drilling in the Gulf of Mexico, as a result of the Macondo field incident, the U.S. is offsetting this by exploring and drilling for oil and shale gas onshore. It is forecasted that the production of oil from shale would increase to 1.5 million barrels per day by 2016, compared to around 500 thousand barrels per day of shale oil production in the United States at present. This is in addition to ongoing exploration and drilling operations in about 30 oil-producing countries worldwide. The French Institute of Petroleum forecasts that there will be investments of up to 50 billion dollars between 2011 and 2015, to build platforms and the necessary installations in offshore zones, and also to drill around 1300 marine wells, in addition to 28 billion barrels in oil equivalent reserves (oil and natural gas). These figures mean that there are extensive efforts underway for oil prospecting in the sea despite the elevated costs of drilling in submerged areas, compared to onshore drilling. This is mainly because of high oil prices which have consistently been above the 100 dollar mark, even during the current period beset by economic crises in the United States and Europe. Other reasons include the persistent attempts by international oil companies to discover larger quantities of oil because of the current and future need for this substance throughout the world, despite all the talk about the end of the oil age and the beginning of the renewable energy age, and also on account of technical advances, which allow for drilling at deep levels in the sea that were hitherto unreachable. This is in addition to drilling and production from remote areas (e.g. the Arctic) as some companies are attempting to do. All these developments mean that interest in oil production remains significant, with hundreds of billions of dollars invested each year in this industry (the French Institute of Petroleum's study points to investments worth 570-600 billion dollars in 2012 in exploration and drilling worldwide, mostly in offshore areas). For one thing, all the available data indicates that the consumption of oil and gas will carry on indefinitely. The data also underscores the unrealistic nature of the theories that question the existence of adequate quantities of oil to meet future global consumption, which increases annually (especially for sustained economic growth in emerging countries). It is now clear that the oil industry is continuously developing and upgrading the technology at its disposal to prospect for oil in old or new regions, and will continue to do so as long as prices remain suitable for this. This encourages the oil industry to take risks to make profits. And indeed, important fields were discovered in the past few years in many parts of the world, such as in Angola, the Caspian Sea (Kazakhstan and Turkmenistan) and Brazil. All this means that large petroleum discoveries will not be limited to the Middle East region. But until further notice, the Middle Eastern oil and gas fields remain the largest in terms of the reserves they hold, and they also remain less costly than other fields. This means that interest in this region's oil reserves will continue, despite discoveries made in more than 30 countries worldwide. The oil industry is constantly changing, politically, economically and technologically. It is therefore important to take these parameters into account when managing the economies of oil-producing countries, and to not rely on currently available oil reserves, or oil revenues, in facing future challenges. *Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
