By Omoh Gabriel, Business Editor
International Energy Agency, one of the world’s leading authorities on energy supply says the era of cheap oil is over and prices could soon be back up to $100 a barrel. The Agency (IEA), in its World Energy Outlook for 2008 released in London yesterday, predicted that prices could soar as high as $200 a barrel by 2030.
Stating the reason for the increase in the prices of oil it said the immediate risk to supply, is not one of a lack of global resources. Instead, it points to a lack of investment where it is needed. The world, the report’s authors said, is not running out of oil just yet – indeed, there is enough of it to supply the world for more than 40 years at current rates of consumption.
The Agency however pointed out that field by field, declines in oil production are accelerating and more money will be needed in research and development to extract the oil there is. While world oil supply will rise, the agency predicts that massive investments in energy infrastructure will be needed – an eye-watering $26 trillion dollars up to 2030.
The report also gives a detailed field-by-field analysis of historical production trends and prospects at hundreds of the world’s largest fields. Add a careful review of structural trends in the upstream industry and a thorough bottom-up analysis of upstream costs and investment and the result is a fascinating look at the future for global oil and gas supply.
The report also looks at energy poverty in major oil- and gas-producing countries in Sub-Saharan Africa. How much would it cost to expand access to more modern energy to the populations of these countries? Would better management of oil and gas export revenues help?
A significant amount of investment – $8.4 trillion – will need to be spent on oil and gas exploration and development. In one scenario considered by the IEA, China and India will account for just over half of the increase in world primary energy demand between 2006 and 2030, and much of the increase in world oil demand. But despite the agency’s assessment of oil and gas reserves, the report contains a stark warning of the consequences of continuing to rely on fossil fuels.
The consequences for the global climate of policy inaction when it comes to decarbonising the world economy are “shocking”, according to the report. “Strong, co-ordinated action is needed urgently to curb the growth in greenhouse gas emissions and the resulting rise in global temperatures,” it said. Is the world facing a supply crunch due to geology or to inadequate investment? What type of post-Kyoto policy framework could stabilise greenhouse gases at low concentration levels? The answers to these burning questions and more are laid out in the 2008 report.
The World Energy Outlook is the world’s most authoritative source of global energy trends. This year’s edition provides a full update of energy projections to 2030, incorporating the latest data and based on improved modelling techniques. It provides in-depth analysis of three hot topics; Post-2012 climate change policy scenarios; Oil and gas supply prospects; Energy poverty in resource-rich Sub-Saharan African countries
The report answer the boggling questions What role could cap-and-trade and sectoral approaches play in a low-carbon energy future? What are the implications of these approaches for energy demand, energy prices, the fuel mix, investment flows, pollution and energy security? The report will enable climate policy-makers to distill the key choices as they wrestle with these issues as part of the Bali road map.
