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Editorial comment

With this first issue of 2009, I am delighted to announce that Oilfield Technology has successfully attained a ‘Certificate of Circulation’ from the ABC Audit Bureau of Circulations.

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With this first issue of 2009, I am delighted to announce that Oilfield Technology has successfully attained a ‘Certificate of Circulation’ from the ABC Audit Bureau of Circulations. For a new publication this is a key achievement, which authenticates our circulation figures and provides a clear profile of where the magazine is being read globally and by whom. We are particularly pleased to have this information available from the very start of the year and would encourage advertisers and potential advertisers to download a copy from our website. I would also like to take this opportunity to thank all of our readers and contributors for the very positive feedback we have received following our launch issues in 2008. It is tremendously gratifying to hear how this new international publication is being embraced by the upstream oil and gas industry. We look forward to building on this successful start and will continue to bring you quality editorial content reflecting the global nature of the exploration, drilling and production sector throughout the course of 2009 and beyond.

Turning to the year ahead, it looks set to be a period of adjustment to what appears to be a radically changed world. The unfolding of the current financial crisis is by no means at an end and will be played out during the course of 2009 and almost certainly beyond, with further shocks more than likely. For the commodities sector, the question still remains as to whether the super-cycle, as witnessed over the course of the last 10 years, is truly at an end or whether what we are experiencing is merely a blip?

Opinion would appear to be divided with many financial analysts optimistic that the sudden plunge in commodity prices, from copper to cotton and including oil, is simply a market correction, or ‘reset’, and that the upward trend will once again continue. They argue that the fundaments have not changed. Supply of essential commodities remains constrained due to a lack of investment over the course of the last 20 years and huge demand from emerging economies. They believe that this situation will only be exacerbated by the credit crunch as counties hold back on essential oilfield or other investments leading to further supply shortages in the future. Opponents of this view, including the World Bank, on the other hand, argue that the commodities boom is now most definitely over. This boom was indeed a super-cycle but history dictates that all booms inevitably lead to a period of bust. They see a weakening in global economic growth, including the emerging economies as already being witnessed in China, and therefore a significant softening in commodities demand. Any significant cancelled investments in new projects they suggest will be more than offset by the effects of the downturn, leading conversely to spare capacity throughout the system.

Regardless of which view is correct for the commodities market as a whole, it is very clear that for the oil and gas industry, the current weakness in crude prices is a serious concern. It is widely accepted that a crude price in the range of US$70 - 80/bbl is necessary to sustain investment in both conventional and non-conventional production as well as make research into alternative energy sources viable. Already, project delays and cancellations are evident across both the upstream and downstream oil and gas industry, as are cost cutting measures including job losses. However, the global economy will undoubtedly recover, whether this is in 2009 or not. A recovery will mean a return to demand growth that will inevitably lead to soaring crude prices if the investment in correcting declining output from conventional resources and the development of new resources is not undertaken in the short term. If this fundamental requirement is overlooked, then crude at US$ 147 may look very reasonable indeed in the years ahead.

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