July 20 (UPI) -- The head of oilfield services company Schlumberger said Friday major investments in exploration and production are needed to counter supply-side pressures.
"Despite OPEC's recent decision to increase production, the global supply base continues to weaken from geopolitical pressure to remove Iranian production from the market, no apparent resolution to falling production in Venezuela, and Libyan exports continuing to be volatile," Schlumberger Chairman and CEO Paal Kibsgaard said in a statement.
The Organization of Petroleum Exporting Countries in late June agreed to be looser with production curtailment efforts in order to offset concerns about dwindling supplies. Venezuelan production is near historic lows because of a wide range of political and economic challenges. Heightened security risks in Libya mean exports have been intermittent for more than a month. In November, U.S. sanctions snap back on Iran, making it difficult for the Islamic republic to put its oil on the market.
Meanwhile, in the United States, total oil production is setting records, but pipeline capacity isn't enough to keep up. Tariffs imposed by U.S. President Donald Trump add to concerns about domestic takeaway capacity because it's mostly foreign suppliers that make steel pipe.
Trump, concerned in early July by spikes in the price of oil, called on Saudi Arabia to open the tap, though only a handful of countries have the ability to put more oil on the market in short order.
"These developments underline the growing need for exploration and production spending to increase significantly, particularly in the international markets, as it is becoming more and more apparent that the new projects expected to come online during the next few years will not be sufficient to meet the increasing demand," Kibsgaard said.
Total revenue for Schlumberger of $8.3 billion is up 6 percent from the first quarter. Revenue from North America, the largest contributor, was up 11 percent sequentially, while the Middle East and North Africa, coming in at No. 2, was up 3 percent.
Gains are supported by higher crude oil prices. At around $73 per barrel for Brent crude oil on Friday, the market is up about 50 percent from this time last year.
"We are primed and ready to capture the growth opportunities coming from the positive market fundamentals, and we are excited by the activity and pricing opportunities that the new industry landscape presents."
Despite the optimism, Schlumberger reported full-year spending expectations for 2018 at $2 billion, unchanged from the levels of the last two years.