Exploration and production (E&P) spending in the global oil and gas sector is expected to drop 22 per cent in 2016, as companies react to lower crude prices, according to the UAE’s Opec governor.

The fall in E&P spending would create an imbalance in supply and demand going forward as less new assets are discovered and developed, said Ahmed Mohamed al-Kaabi, speaking at the World Steel Association conference in Dubai on 10 October.

“Global E&P spending declined by about 26 per cent in 2015 and a further drop of 22 per cent is anticipated in 2016,” Al-Kaabi said, citing Opec forecasts. “If we combined both years together, the decline is expected to be more than $300bn.”

“This will affect not only the new projects coming on stream but new discoveries too,” added Al-Kaabi, who was appointed as the UAE’s new Opec governor in May.

Opec members agreed at the end of September to cut crude production across the 14-member bloc in order to support prices.