Exxon CEO Says Global Oil Markets Well Supplied

Reuters

Exxon Mobil Corp (NYSE:XOM) Chief Executive Rex Tillerson said on Monday global oil markets are well-supplied.

"Inventory levels are still very healthy in the U.S. and other OECD (Organization for Economic Co-operation and Development) countries," Tillerson told reporters at an event in Qatar's industrial city of Ras Laffan.

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"You still have OPEC (Organization of the Petroleum Exporting Countries) with spare capacity of something like 6 million barrels per day. I would say there's plenty of supply," he said.

Tillerson, head of the world's largest publicly traded oil company, expects a slow return to deepwater drilling in the Gulf of Mexico, where the U.S. government is in the process of hashing out new safety regulations following the BP Plc  (NYSE:BP) oil spill disaster.

"The process is quite lengthy and involved," Tillerson said. "At this point, there have been no new deepwater permits issued. We're going to have to watch how the Department of Interior and (Bureau of Ocean Energy Management) process those applications."

Tillerson said Exxon has not slowed down drilling in North America, even as U.S. competitors like ConocoPhillips  (NYSE:COP) halted some unprofitable natural gas production as big supplies weigh on prices.

He also denied that the company pulled out of a $6 billion petrochemical project at Qatar's Ras Laffan industrial city, saying the company signed a tentative partnership agreement earlier this year.

"We completed all the work and concluded the commercial agreements. Now we're just waiting for the Qataris to make a decision on what they want to do," the CEO said.

Qatari Energy Minister Abdullah al-Attiyah said recently that Qatar is in talks with Total and Royal Dutch Shell to develop the proposed complex, which includes a 1.6-million-tonne-per-year steam cracker.

A number of industry sources believe that the U.S. giant had pulled out of the project.

Qatar is the world's largest producer of liquefied natural gas (LNG) and Exxon is the second largest foreign investor in the Gulf Arab state after Shell.

If Exxon does pull out of the project, it will be the third time a U.S. company has pulled out of an energy project in the Gulf region this year.

Exxon's petrochemicals business has been relatively robust this year, Tillerson said.

"The chemicals business has been pretty strong this year - prices are strong, both on the commodities side and on the specialty side. There's a lot of demand in China, but it's pretty solid globally," the executive said.

Tentative signs of economic recovery can be seen in the United States, he said.

"There are positive signs we can identify, both in manufacturing and in other parts of the economy," he said. "We're beginning to see some pickup in the U.S., albeit slowly. I'd say we're encouraged, but (at what rate) it can continue remains to be seen."