Schlumberger, the world’s largest listed oilfield services group, has said the oil market will face growing supply challenges over the coming year, following the steep drop in investment in recent years.
Paal Kibsgaard, Schlumberger’s chief executive, said as the company reported first quarter earnings that three consecutive years of “dramatic underinvestment” in oil exploration and production worldwide had resulted in declining production in countries including Angola, Norway, Mexico, Malaysia, China, and Indonesia.
He added that there were “production challenges” emerging in the US shale oil industry, including constraints on pipeline capacity and other infrastructure, and weaker production from wells drilled close together.
“A significant increase in global E&P investment will be required to minimise the impending deficit,” he said.
For the quarter, Schlumberger reported earnings slightly above expectations, with strength in its US business offset by the weakness of its international operations, which the company said “largely reflected transitory factors”.
Revenues were down 4 per cent at $7.8bn for the three months to end of March. Net income was $525m, an 88 per cent jump from the prior year period. Excluding one-off items, earnings per share were 38 cents, down 5 per cent from the equivalent period of 2017.