PARIS (Reuters) – The chief executive of French oil major Total said the United States will not reach its aim of energy independence as the drop in oil prices will hit American shale oil producers.
“It is not true the U.S. will be independent in oil, they continue to import,” CEO Patrick Pouyanne told CNBC in an interview on Friday.
“Yes, production in the U.S. has increased from 6 million to 11 million barrels (per day) but the U.S. consumes 18 million barrels and part of the oil is coming from (the Middle East),” he said, according to a transcript distributed by the business television news channel.
The United States has enjoyed a resurgence in oil and gas production in recent years as higher oil prices and technological innovation spurred investment in high-cost shale formations in states such as North Dakota and Texas.
American President Barack Obama said last September that energy independence was “closer than it’s been in decades”.
Total’s Pouyanne said the rapid decline in the number of rigs drilling for oil in the United States, which fell to the lowest since December 2011 last week, was a sign that U.S. production would quickly adjust to lower prices.
The weaker oil price, which has more than halved since June, would also have a particular impact on leveraged independent oil and gas producers, he said.
“Most of these shale developments were based on big borrowing, you know the big banks, cheap money, we have plenty of money as interest rates were very low,” he said. “I think it’s like a bubble there which is just exploding, it will have an impact.”
The French oil major, Europe’s second-biggest oil company, took a $6.5 billion impairment in the fourth quarter, mainly on its North American shale gas and oil sands projects.
However, the drop in oil prices is welcome news for U.S. consumers, Pouyanne said.
“U.S. investors in oil and gas are not happy. But globally speaking for the U.S economy, as it’s an importing economy, it is good news,” he said.
(Reporting by Michel Rose, editing by David Evans)