IEA says global energy supply 'in danger' from turmoil in Middle East and Russia - By Emily Gosden, and Andrew Critchlow - http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11225503/IEA-says-global-energy-supply-in-danger-from-turmoil-in-Middle-East-and-Russia.html
Oil prices may spike by 2020 as the Islamic State crisis deters companies from investing in Iraq, energy watchdog warns
A toxic mix of Middle Eastern turmoil, falling investment and rising demand may result in oil prices spiking sharply by 2020, the world's top energy watchdog has warned.
Fatih Birol, chief economist of the Paris-based International Energy Agency (IEA) said on Wednesday that "major problems" lay ahead if investments into new production capacity were not made urgently.
Brent crude oil prices have fallen to just over $80 per barrel, from $115 in June, raising hopes of cheaper petrol prices for British motorists.
But Mr Birol warned that while current lows may remain for a few years, "this comfort zone is a temporary one" and prices may well rebound "higher than what we have seen before the prices started to go down".
Speaking at the launch of the IEA's annual World Energy Outlook, he said: "You may see prices spike around 2020 if investments in the Middle East, especially in Iraq, don't take place.
"Iraq is the easiest oil in the world from a geological point of view but the instability in the country doesn't give any confidence for investors and nobody wants to invest there today.
"It seems to me the problems in Iraq today - Isis and others - will not be solved tomorrow. It's a structural issue therefore this challenge is a serious one."
Mr Birol said current low prices presented a "major challenge" for the relatively high-cost production of shale oil in the US, with investment expected to fall 10pc next year.
The lower petrol and diesel prices may simultaneously "give an upwards push to oil demand growth", compounding the likelihood of a supply crunch.
In its 726-page report, the IEA warned: "The global energy system is in danger of falling short of the hopes and expectations placed upon it. Turmoil in parts of the Middle East - which remains the only large source of low cost oil - has rarely been greater since the oil shocks of the 1970s. Conflict between Russia and Ukraine has reignited concerns about gas security."
The IEA report also forecast that renewable power sources such as wind farms and solar panels would overtake coal as the leading world electricity source around 2035, a trend described as "incredible" by Maria van der Hoeven, the IEA's director.
"Wind power accounts for the largest share of growth in renewables-based generation, followed by hydropower and solar technologies," the IEA said. But it warned that as the share of renewables increased it would become "more challenging" to deal with their intermittency.
"Rapid expansion of wind and solar PV raises fundamental questions about power market designs: their ability to ensure adequate investment in conventional power plants and long-term reliability of supply."
Mr Birol pointed out that peak electricity demand was typically on a February evening, when there was no sunlight in the UK. Gas would be needed as back-up, he said.
The IEA said global subsidies for renewables would almost double to $230bn a year in 2030 but would then fall back as the technologies became more competitive. It said fossil fuel consumption subsidies were currently $550bn. Mr Birol criticized them as "paying you to pollute the world".
Petrol prices have started to respond to the recent drop in the value of oil, with Britain's major supermarket retailers all slashing costs at the pumps. Last week, Danny Alexander, the Chief Secretary to the Treasury, said that savings in wholesale oil and petroleum product costs should be passed on faster to consumers. Asda, Tesco and Morrison's have all trimmed a few pence off at the pumps, and the price of petrol fell below 120p per liter for the first time in four years, with diesel available at just over 123p last week.
In one of the IEA's scenarios it forecasts that higher oil prices will see transport fuel move away from dependence on petroleum. However, the watchdog says that oil products continue to make up 95pc of total energy use in transport, barely changed from the last oil shock in 1973.
The report said that global energy demand is expected to grow by 37pc by 2040, with rising patterns of consumption driven by Asia, the Middle East and Latin America. By 2030, the IEA expects China to overtake the US as the world's largest consumer of oil.
World oil supply is forecast by the IEA to rise to 104m bpd within 25 years, but will depend critically on investments in the Middle East. "As tight oil output in the US levels off, and non-OPEC supply falls back in the 2020s, the Middle East becomes the major source of supply growth," said the report.
The Organization of Petroleum Exporting Countries (Opec) - which is dominated by Middle East producers - is scheduled to meet at the end of this month to discuss its production quotas amid a slowdown in world demand. The group accounts for about a third of the world's physical oil supply but has suffered recent losses in market share due to the rise of US shale.
BE SURE TO CHECK OUT MY ALL NEW PROPHECY AND CREATION DESIGN WEBSITES. THERE IS A LOT TO SEE AND DO..........
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.