TUESDAY, 29 JUNE 2010 BY OBIORA ADUBA 

 

The outlook for crude oil and natural gas markets is uncertain as the global oil demand is expected to rise by 92 million barrel per day (b/d) in 2015, the International Energy Agency (IEA), has said.IEA said this on its latest crude oil price report and forecast that demand will increase by as much as 1.4 per cent (1.2 million b/d) by 2015 and that a barrel of crude will cost an average of $86, up 11.7 per cent from the current price of $77 per barrel.

 

Speaking during the launching of the new publication in Paris recently, Executive Director of IEA, Nobuo Tanaka said that “oil and gas markets are starting to show signs of recovery, but the impact of the recession differs across regions, and the outlook remains very uncertain.”According to him, “in both oil and gas markets, IEA sees a dichotomy between member countries of the Organisation for Economic Cooperation and Development (OECD) and non-OECD countries, with strong growth in China, India, and the Middle East against weaker demand elsewhere, especially in Europe with its fragile economy.

 

“These contrasting trends make it difficult to see how oil and gas markets will develop in the medium term, but what is clear, is that both will need more investment, a greater focus on energy efficiency, and improved data,” he said.Tanaka stressed that the oil-supply outlook shows a marked improvement from a year ago, and that while non-Organisation of Petroleum Exporting Countries (OPEC) supply continues to grow slowly, OPEC oil and natural gas liquids account for the bulk of the agency’s forecast for 5.4 million barrel per day of production growth to 2015.

 

IEA warns that oil supplies could tighten without improved efficiency and a diversification of transport fuels. The agency also points out the role of non-OECD countries, where almost all growth in oil demand is to be found and the importance of transportation in driving demand for fuels.The IEA also noted that the United States has become the world’s leading producer of natural gas, mainly as a result of new drilling in the various shale gas plays and the initial high rates of production on these wells. As long as the oversupply of natural gas remains, prices will remain depressed.

 

“The oil supply outlook shows a marked improvement from a year ago. While non-OPEC supply continues to grow slowly, OPEC crude and natural gas liquids account for the bulk of the 5.4 million bpd of production growth to 2015.”It predicts the natural gas surplus lasting beyond 2013 in some areas. “This oversupply of gas put strong downward pressure on prices, noting that spot prices for gas were well below half of oil prices for most of 2009. “While the outlook for gas supplies may thus appear relatively comfortable, we cannot afford complacency – we must push forward now with new investment,” Tanaka said.The new report says that demand modeling for the OECD countries indicates a return to 2008 demand levels by 2012 but with significant variation between regions.

 

“Long lead times for oil and gas projects require commitment years in advance to new supply projects. And there are other factors that could impact future supplies, such as the continuing depletion of existing oil and gas production, geopolitical risks in producing countries as diverse as Nigeria, Russia and Iraq, and potential deepwater project delays after the recent Gulf of Mexico disaster.

 

“This is not about an inadequate resource base in either oil or gas, but about timely and adequate investment. For both energy sources, investment is needed through the value chain – in the upstream and in new hydro cracking capacity in the refining sector for oil, and in pipelines and other infrastructure for gas,” he said.

 

(Source:Guardian)