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"I
see the first mixed signs for recovery of oil prices," Ben van
Beurden told an oil industry conference in London.
"But with U.S. shale oil being more resilient than we originally
thought and a lot of oil still in stock, it will take some more
time to rebalance demand and supply," he added.
Oil prices have collapsed over the last year in the face of
heavy oversupply, with benchmark Brent crude <LCOc1> falling to
below $50 a barrel from a high above $115 in June 2014.
The Organization of the Petroleum Exporting Countries led by
Saudi Arabia has increased production in an attempt to build
market share, leaving some other producers, including shale
companies in North America, operating below break-even costs.
Van Beurden said many U.S. oil producers would struggle to
refinance while prices remained so low, leading to lower output
in the future: "Producers are now looking for new cash to
survive and they will probably struggle to get it."
Longer-term, there was a risk that low levels of global
production could bring a spike in oil prices, he said.
If prices remained low for a long time and oil production
outside OPEC and the United States declined due to cuts to
capital expenditure, there was not likely to be any significant
spare capacity left in the system, he said.
"This could cause prices to spike upwards, starting a new cycle
of strong production growth in U.S. shale oil and subsequent
volatility," van Beurden said.
(Reporting by Ron Bousso; Editing by Christopher Johnson and
Dale Hudson)
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