A lack of investment in oil projects will likely come back to bite the energy market in the foreseeable future, the CEO of one of the world’s largest sovereign wealth funds told CNBC.
“When you look at the investments in exploration projects all over the world … It has been depleted, and I believe we will see the results of that in the coming years,” Mubadala CEO Khaldoon Al Mubarak told CNBC. Abu Dhabi-based Mubadala has around $125 billion of assets under management and specializes in buyout investments.
The price of oil tumbled from $120 a barrel in June 2014 due to weak demand, a strong dollar and booming U.S. shale production. OPEC‘s reluctance to cut output was also seen as a key reason behind the fall. But, the oil cartel soon moved to curb production — along with other oil producing nations — in late 2016. Oil and gas firms worldwide have subsequently cut their share in investment given the subdued market prices.
“It has been challenging from one perspective dealing with a lower oil price environment but at the same time, very opportunistic because it helped us move faster down the diversification strategy,” Mubadala’s Al Mubarak said.
