Crude oil supplies sufficient for coming decades: OPEC
World energy needs will rise by more than 50% by 2030 but adequate oil reserves, conservation and new methods of recovery mean supply will keep pace with demand, the Organisation of Petroleum Exporting Countries said today.
But Opec’s secretary general acknowledged that dangers to steady supply exist. Addressing one – the threat of a US or Israeli attack on Iran because of its nuclear defiance – he warned that his organisation was unprepared – and unable - to make up for resulting oil shortfalls.
“It is impossible to replace the production of Iran,” Opec’s number two producer, Abdalla Salem El-Badri told reporters at the presentation of the organisation’s long term oil market outlook in Vienna.
The US and Israel have not ruled out a military strike on Iran as a last option if it does not give up uranium enrichment and heed other UN Security Council demands meant to dispel the fear Tehran wants to make nuclear arms.
Tehran produced just over four million barrels of crude a day last year – more than 10% of Opec’s total production.
In its report, World Look Outlook for 2008, Opec took issue with critics blaming present skyrocketing prices on the refusal of the organisation to increase output, asserting that the weak US dollar and market speculators were at least partly to blame.
And it suggested that decades of low prices led to under-investment, leaving the industry ill-prepared to sate the increased hunger for crude generated by strong economic growth.
Past “low prices were bad for the oil industry, and in the longer term they were also bad for the consumer”, said the summary of the 214-page report. At the same time, despite delivery bottlenecks, “there is enough oil to meet the world’s needs for the foreseeable future,” it added.
El-Badri made the same point.
“Today, what is apparent is that oil supply and demand fundamentals are healthy,” he wrote. “There is, and has been, more than enough supply to meet demand, and oil stocks in major consuming countries are at comfortable levels,” he said, in a foreword to the report. “This should point away from the direction of current price levels.”
Later, he said there was no reason for present prices because there was “plenty of oil in the market (and) plenty of oil in ... stocks”.
The report projected oil demand to rise by 29 million barrels a day from 2006 through to 2030 to reach a daily 113 million barrels a day – a drop of four million barrels a day over its predictions last year, “due in part to the higher oil price assumption” – expectations that pricey petroleum is here to stay.
A large part of that projected demand will be met by new recovery and production procedures, meaning total demand for “conventional crude” – oil pumped from wells and other methods using present day technology – will not exceed 82 million barrels a day by 2030, said Opec.
In comparison Opec last month said it expected oil consumption this year to amount to an average of 86.9 million barrels per day.
“Oil has been in the leading position in supplying the world’s growing energy needs for the past four decades, and there is a clear expectation that this will continue,” said the report, estimating that crude and other fossil fuels would make up 85% of the world’s energy mix in 2030. “Gas is expected to grow at fast rates, while coal retains its importance in the energy mix.”
The generally optimistic tone of the report contrasted sharply with forecasts published last week by the International Energy Agency.
That report by the energy watchdog of the world’s top industrialised nations predicted that oil supplies would remain tight at least for the next five years, despite record prices that have reduced demand.
IEA executive director Nobuo Tanaka said the world was in the grip of an “oil shock”, similar to one in the 1970s and then the 1980s – but with no simple fix this time.
In its monthly forecast today, the IEA slightly raised its forecast for global oil demand this year and said growth would continue in 2009 thanks to demand in developing countries.
Part of the OPEC report’s upbeat tone appeared to be based on the belief that new discoveries would make up for increased demand.
“The level of ultimately recoverable reserves is clearly more than sufficient to supply the amount of crude oil and NGLs (natural gas liquids) that will be needed,” it said, saying new estimates of additional reserves make figures on which present estimates are based outdated.
Publicly, Western leaders and the Organisation of Petroleum Exporting Countries are split over the cause of record oil prices. OPEC blames the weak US currency and speculators. The West says it is a supply issue.
