IEA urges countries to reduce oil dependence
FT.com / International Economy / Oil - IEA urges countries to reduce oil dependence
By Carola Hoyos in London
Published: November 7 2005 19:51 | Last updated: November 7 2005 19:51
The International Energy Agency on Monday raised its forecast for international oil prices to at least $65 a barrel in 2030.
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However, the consuming countries? energy watchdog agency warned that this was an optimistic scenario and consuming countries could no longer rely on major oil-producing countries to invest enough to meet long-term demand.
Instead the IEA said its members needed to implement policies to reduce their dependence on oil in order to avoid a price rise that could derail their economies.
In a report published on Monday, the IEA confirmed comments made to the FT last week by Fatih Birol, the group?s chief economist. He had warned that Saudi Arabia, the world?s biggest oil exporter, might not muster the political will to increase production from 10m barrels a day to 18m b/d by 2030.
If the investment ? $23bn (?19.4bn, �13bn) a year for the Middle East and North Africa ? were not forthcoming, international oil prices by 2030 would rise to $86 a barrel, rather than the $65 a barrel envisioned if the region met the challenge.
Complicating matters is the ending of the era of large oilfields. The IEA predicted that by 2015 production at the world?s largest onshore oil field ? Saudi Arabia?s Ghawar field ? will have peaked. Instead of being able to rely on such fields for most of its oil, the world will become dependent on smaller Middle East fields.
Today 80 per cent of the region?s oil comes from large fields. By 2030 that proportion is expected to have halved, making new investments all the more critical.
But by implementing policies to reduce demand, countries would lower emissions and could save 12m b/d by 2030, as much as today?s production of Saudi Arabia and Kuwait combined, said William Ramsay, the IEA?s deputy executive director.
?Consuming countries have realised there has to be a policy response to these prices and that process has begun,? he said. ?We would be quite happy to see our reference scenario made irrelevant by good policy decisions,? he added, saying the reference scenario, in which consuming countries do not change their demand patterns, was ?unacceptable?.
Increasing fuel efficiency and finding alternatives would also limit, but not eliminate, growth in the world?s dependence on a few countries in the Middle East.
That dependence is not only set to grow in oil, but also in natural gas. By 2010, most of the Middle East and North Africa?s natural gas will be exported to Europe and the US rather than to the Far East, the IEA said.
By Carola Hoyos in London
Published: November 7 2005 19:51 | Last updated: November 7 2005 19:51
The International Energy Agency on Monday raised its forecast for international oil prices to at least $65 a barrel in 2030.
ADVERTISEMENT
However, the consuming countries? energy watchdog agency warned that this was an optimistic scenario and consuming countries could no longer rely on major oil-producing countries to invest enough to meet long-term demand.
Instead the IEA said its members needed to implement policies to reduce their dependence on oil in order to avoid a price rise that could derail their economies.
In a report published on Monday, the IEA confirmed comments made to the FT last week by Fatih Birol, the group?s chief economist. He had warned that Saudi Arabia, the world?s biggest oil exporter, might not muster the political will to increase production from 10m barrels a day to 18m b/d by 2030.
If the investment ? $23bn (?19.4bn, �13bn) a year for the Middle East and North Africa ? were not forthcoming, international oil prices by 2030 would rise to $86 a barrel, rather than the $65 a barrel envisioned if the region met the challenge.
Complicating matters is the ending of the era of large oilfields. The IEA predicted that by 2015 production at the world?s largest onshore oil field ? Saudi Arabia?s Ghawar field ? will have peaked. Instead of being able to rely on such fields for most of its oil, the world will become dependent on smaller Middle East fields.
Today 80 per cent of the region?s oil comes from large fields. By 2030 that proportion is expected to have halved, making new investments all the more critical.
But by implementing policies to reduce demand, countries would lower emissions and could save 12m b/d by 2030, as much as today?s production of Saudi Arabia and Kuwait combined, said William Ramsay, the IEA?s deputy executive director.
?Consuming countries have realised there has to be a policy response to these prices and that process has begun,? he said. ?We would be quite happy to see our reference scenario made irrelevant by good policy decisions,? he added, saying the reference scenario, in which consuming countries do not change their demand patterns, was ?unacceptable?.
Increasing fuel efficiency and finding alternatives would also limit, but not eliminate, growth in the world?s dependence on a few countries in the Middle East.
That dependence is not only set to grow in oil, but also in natural gas. By 2010, most of the Middle East and North Africa?s natural gas will be exported to Europe and the US rather than to the Far East, the IEA said.
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