16 November 2012 09:26 [Source: ICB]
Increased oil and gas production in the US, principally from unconventional resources such as shale, will shift global supply demand balances and revitalise US manufacturing, the Paris-based International Energy Agency (IEA) said.
The US is projected to overtake Saudi Arabia in oil production from 2020
Copyright: F Delventhal
Certainly the changes are dramatic and the agency's comments on expected US oil self-sufficiency grabbed the headlines. But it is the shift to unconventional hydrocarbon and other energy resources globally that is fuelling a dramatic change in the world's energy markets.
There may be no immunity for the US from global fossil fuel markets - that is markets for oil, coal and natural gas - but increased output from shale and tight oil and gas deposits is expected to radically alter the energy balance.
The IEA says that less expensive gas and electricity prices are already spurring US economic activity and giving industry a competitive edge. And it expects the US to overtake Saudi Arabia to become the world's largest oil producer from 2020 to the middle of that decade.
In one of its scenarios, North America becomes a net oil exporter around 2030 - a fact which sees a change in direction of international oil trade towards Asia and makes Middle East to Asia oil routes even more strategically important.
That will be the case, also, as Iraq gears up production. Many issues need to be addressed before Iraq can successfully captalise on its considerable oil reserves but in the IEA's projection, Iraq's output is more than 6m bbls/day in 2020 and more than 8m bbls/day in 2035. To put that into context, Saudi Arabia's oil production is expected by the IEA to be 10.6m bbls/day in 2020.
By 2035, Iraq is a key supplier to China and other fast-growing markets in Asia and it overtakes Russia as the second-largest oil exporter by the 2030s.
"Without this supply growth from Iraq, oil markets would be set for difficult times," the IEA said.
Globally, energy demand is increasing, and by as much as one third by 2035, according to the IEA. Demand growth from the OECD nations is expected to be minimal while China, India and the Middle East account for 60% of additional demand. Links between regional gas markets will be strengthened by a more flexible liquefied natural gas (LNG) trade.
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