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IEA warns of 50% oil price rise by 2030
The International Energy Agency, the oil sector monitoring body, on Wednesday said that oil prices by 2030 would be 50 per cent higher than today if Saudi Arabia did not muster the political will to invest billions of dollars in new production.Fatih Birol, the group's chief economist, said in an interview with the Financial Times that Saudi Arabia, the most important oil producer, might not make the investment needed to ensure production met the strong demand growth in China and India. âIt is not a problem of availability of reserves or capital. We need to be sure that the increase in production will be high enough and a sustained production capacity increase policy is in place. That will need sustained political will,â he said. Saudi Arabia has plans to invest $14bn to raise output capacity from 11m barrels a day to 12.5m b/d by 2009, according to a report by Samba Financial Group, a Riyadh-based bank. The IEA said Saudi Arabia would need almost to double current output of 10m b/d to meet the expectations of demand in 2030. But Mr Birol said the kingdom might muster the long-term political will only to produce just over half the extra barrels deemed necessary. Iran and Iraq are also vital to ensuring adequate oil and natural gas supplies in the next 25 years. But both face political hurdles to achieving the necessary investment. Many Middle East countries fear that investing heavily in new oil supplies will deplete fields too quickly and cut revenues by depressing oil prices. Mr Birol said: âWe may end up with much less oil from the Middle East than we demand. There is substantial risk of substantially high oil prices if current investment in the Middle East is not stepped up substantially. âSuch high oil prices would be an additional trigger for major consuming nations to introduce policies to save oil and look for alternative sources. If they don't, the global economy but mainly the economies of the consuming nations will suffer.â The agency's price forecast, which is often conservative, forms the benchmark for many other forecasts, including those made by central banks, oil companies and big oil producers. The agency's near-term forecasts are below crude oil's current price range of about $60 a barrel because the IEA, which releases its World Energy Outlook next week, expects new supplies of oil and investment in platforms, pipelines and refineries to ease the current crunch. Oil demand is expected to more than double by 2030. Much of the increase will have to be met by countries in the Middle East and Africa. Meanwhile, natural gas demand will grow at a faster rate, with Qatar, Algeria and Iran as its biggest producers. Posted by: lotp 2005-11-03 |
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