The world needs the equivalent of four new Saudi Arabias if it is to fend off a looming supply crunch, a top International Energy Agency official said on Wednesday. Fatih Birol, author of the IEA's World Energy Outlook published on Wednesday, told Reuters investment in new output should be increased but warned the global financial crisis could delay crucial energy investment.
"Even if growth in global demand was at zero for the next 22 years, in order to compensate the decline in the existing fields, we need to increase the production by around 45 million barrels per day (bpd), which is the equivalent to bringing four new Saudi Arabias to the markets," he said. Massive investment of $26 trillion will be needed by 2030 to offset the impact of falling supply, the IEA Outlook said.
"The Outlook puts on the table the new energy realities and we highlight as the two eminent challenges oil supply and climate change," Birol said. "But it also tells us that there are ways to fix the problems if we are not too late."
He referred to the challenge of tackling ideology, economics and the changing structure of the industry as almost 80 percent of the growth in oil production is expected to come from state-owned oil companies by 2030. One of the hurdles was that oil would increasingly come from smaller fields, raising the extraction costs, Birol said. The Paris-based IEA, which advises 28 nations on energy policy, said in its annual Outlook that if current trends persisted, energy-related emissions of carbon dioxide (CO2) would rise inexorably, pushing up global temperature by as much as six degrees Celsius in the long term.
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