The International Energy Agency (IEA) is the global energy watchdog. Its new annual report, just published, says “the world’s energy system is at a crossroads”, and adds that “current global trends in energy supply and consumption are patently unsustainable”. As examples, it highlights:
• The world will need 45 mb/d of new capacity (4 times current Saudi capacity) by 2030, just to offset the effect of oilfield decline.
• Conventional oil production will only rise by 5mb/d between 2007-2030, “as almost all the additional capacity from new oilfields is offset by declines in output at existing fields”.
• 51% of world oil supplies will come from OPEC by 2030, as non-OPEC output falls. Saudi Arabia will have to increase production to 15.6mb/d.
• NGLs, and new output from Canadian oil sands, will have to provide most of the supply increase that the world will require by 2030.
Yet in the short-term, oil prices remain under pressure. The value of the “OPEC basket” has now dipped below $50/bbl, causing OPEC to warn of further production cutbacks. And as the blog noted earlier this month, today’s low refining margins, and year-end cash pressures, may well put further short-term pressure on crude oil demand.
So there is at least a chance that we may end the year with prices, temporarily, in the $20-$30/bbl range, just when the IEA is calling for major investment to fund new sources of production.