Middle East Political Instability May Speed Up Unprecedented Changes in World Oil and Gas Sector

Commenting on the current events in Northern Africa and the Middle East most observers discuss possible irregularities in oil delivery to Europe and try to predict the route of inevitable oil price rise. However analyzing the Middle East events from the perspective of would be geopolitical consequences and new tendencies, one can see the coming unprecedented changes on the global oil and gas market within ten years.

Political instability in the Middle East is likely to be that “last straw” which finally makes the leading energy consuming countries, the USA and China first of all, take urgent and large scale measures to enforce their energy security and reduce dependence on energy resources import. Along with such widely used methods of enforcement as alternative sources of energy and efficient energy use, rapid development of own production of non-traditional hydrocarbons, namely shale gas and shale oil, is likely become a new key method.

Leading energy corporations are already buying up holdings in the field of non-traditional hydrocarbons production all over the world. After ExxonMobil purchased XTO Energy- the leading American shale gas production company – (at $40 billion price) in 2010 new investments followed. During the next half a year almost all large-scale companies on the world-wide oil and gas market together with a number of mining companies invested more than $50 billion in this perspective sector.

The flow of investment is sure to be a great incentive to further development of new technologies in the field of production of all the range of hydrocarbons from non-traditional sources. Investing considerable sums of money in new spheres large-scale companies will do everything possible to achieve their goals, including influencing legislative authorities by lobbying. That is why it is highly possible that there will be more favorable conditions for legal access to such deposits in China and the USA.

Such investment activity may indicate the beginning of a new era in the oil and gas history. Analysis of these relatively new tendencies gives grounds for prediction of the rapid transformation of the global oil and gas market, i.e. decrease in the use of oil, regionalization and decreasing role of the international trade. Along with it reinforcement of the traders’ position on the market and considerable price reductions on non-traditional hydrocarbons is possible within some time. Thereby key companies on the world energy market, mainly from supplying countries, will meet new challenges and will have to make considerable changes in their strategies.

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