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ANALYSIS

US shale boom has ‘minimal impact on GCC’

Dubai, November 19, 2013

The effects on oil and gas producers in the GCC of surging shale oil and gas production in North America are minimal at present, said a Credit FAQ report by Standard & Poor's Ratings Services.

The report titled "What Is The Significance Of The Shale Phenomenon For Gulf Oil And Gas Producers?" points out that the shale boom could impact the oil price in an extreme medium- to long-term extreme scenario.

Under this scenario, shale oil supplies increase substantially from the US and sufficient infrastructure would be in place to render shale oil exports competitive with GCC oil exports.

"Notwithstanding the potential consequences of shale oil production in North America on the level of oil imports, we consider there to be limited effect on rated GCC oil producers at present," said credit analyst Karim Nassif.

"This, in part, reflects GCC-based producers' ability to redirect their oil exports, as well as the fact that many of them export heavier crudes that are not currently being displaced by shale volumes.

"The more immediate effects of US shale production, in our view, center on GCC-based natural gas producers.

"For now, diverting Gulf oil and gas exports originally destined for the US to Asia and the Far East has proved effective. However, GCC-based oil and gas incumbents recognise that more substantive and innovative strategic plans are needed over the longer term.”

The report addresses the question on how the shale boom could affect the creditworthiness of GCC oil and gas companies over the short, medium, and long term, in Standard & Poor's opinion; what does Standard & Poor's consider to be the most significant effects for Gulf states arising from shale oil and gas extraction in North America; how GCC countries and their national oil company-backed incumbents countering the challenge of the shale boom in the US; and what factors triggered the shale boom in North America. - TradeArabia News Service




Tags: Oil | US | GCC | gas | impact | North America | Shale |

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