World warned to change energy habits
November 8, 2005
By Marguerita Choy
Paris - The world must change its energy habits or struggle with choking fumes, runaway oil demand and a growing dependence on the volatile Middle East for fuel, the International Energy Agency (IEA) said yesterday.
Energy demand and greenhouse gas emissions would soar by more than 50 percent by 2030 if consumers kept burning oil unchecked, the IEA said in its World Energy Outlook.
That would blow a hole in the UN's Kyoto protocol aimed at cutting developed nations' emissions 5 percent below 1990 levels by 2008/12.
To keep pace with booming demand over the next 25 years, top producer Saudi Arabia and its neighbours would have to spend an annual $56 billion (R376 billion) on rigs and refineries or oil prices would race higher, the IEA said.
"These projected trends have important implications and lead to a future that is not sustainable," said Claude Mandil, the chief of the energy adviser to 26 industrialised countries.
Under the IEA's reference scenario, a likely but undesirable outcome, the Middle East and north African producers would have to double annual investment on their oilfields to satisfy consumers' growing thirst for fuel.
Failure to spend enough over the next 25 years could slap another $13 a barrel on the projected price of oil.
"If investments do not come in a timely and sufficient manner, there will be higher oil prices, and global economic growth will suffer," said IEA chief economist Fatih Birol.
The IEA also outlines a deferred investment scenario where producers delay spending - inadvertently or deliberately - and a world alternative policy scenario, where importing nations take action to cut demand and change the pattern of fuel use.
"There is already evidence of the deferred scenario over the past five years, which has implications for everyone," said IEA deputy executive director William Ramsay.
"We would be quite happy to see our reference scenario made irrelevant by good policy decisions."
Not all countries have signed up to Kyoto and the combined emissions of those that have are well below half the world total. The main outsider is the US, the top polluter, which accounts for about 25 percent of all emissions. The other big emitters outside Kyoto are China and India.
Drastic spending cuts on oilfield expansions in the late 1980s and 1990s have left the world stretched for supplies as demand explodes in Asia and the US. The IEA said the Middle East and north African producers have to "reinvest with confidence".
Saudi Arabia would have to shell out $174 billion on oil and gas projects through 2030 under the IEA's reference scenario. For its part, Riyadh already has a $50 billion oil and gas expansion project in train.
The kingdom would remain the globe's oil superpower, with output rising from 10.4 million barrels per day (bpd) in 2004 to 18.2 million bpd in 2030. Exports would jump from 8.3 million bpd in 2004 to 14.4 million.
Even if world governments got tough on tackling the environment and energy security, demand in 2030 would still soar by 37 percent and the Middle East and north Africa would be pumping much more oil than now.
"This will add to the vulnerability to a disruption and to the risk that those countries will seek to use their dominant market position to force up prices at some point in the future," said the IEA.
In the IEA's scenario, global dependence on Middle East fuel would rise as oil demand grows 1.4 percent a year.
Asia looks especially vulnerable in the IEA's reference scenario, with the region's reliance on Middle East oil and gas growing from 83 percent in 2004 to 90 percent in 2030.
North America would become the Middle East's biggest importer in 2030 when imports hit 11 million bpd, a quarter of the region's total exports of 39 million bpd.
Oilfields in the Middle East and north Africa are in no danger of running dry over the next 25 years. And if producers there spend on the order laid out in the reference scenario, oil output would rise by 75 percent by 2030 and the region's share in global oil output would climb from 35 percent to 44 percent.
Crude production would rise from 29 million bpd in 2004 to 50.5 million bpd in 2030, with the Middle East accounting for nearly all the increase.
- Reuters
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