IEA says “world’s energy system at crossroads”
on November 16, 2008

IEA.jpgThe International Energy Agency (IEA) is the global energy watchdog. Its new annual report, just published, says “the world’s energy system is at a crossroads”, and adds that “current global trends in energy supply and consumption are patently unsustainable”. As examples, it highlights:
• The world will need 45 mb/d of new capacity (4 times current Saudi capacity) by 2030, just to offset the effect of oilfield decline.
• Conventional oil production will only rise by 5mb/d between 2007-2030, “as almost all the additional capacity from new oilfields is offset by declines in output at existing fields”.
• 51% of world oil supplies will come from OPEC by 2030, as non-OPEC output falls. Saudi Arabia will have to increase production to 15.6mb/d.
• NGLs, and new output from Canadian oil sands, will have to provide most of the supply increase that the world will require by 2030.
Yet in the short-term, oil prices remain under pressure. The value of the “OPEC basket” has now dipped below $50/bbl, causing OPEC to warn of further production cutbacks. And as the blog noted earlier this month, today’s low refining margins, and year-end cash pressures, may well put further short-term pressure on crude oil demand.
So there is at least a chance that we may end the year with prices, temporarily, in the $20-$30/bbl range, just when the IEA is calling for major investment to fund new sources of production.

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