THE CHIEF ECONOMIST of the International Energy Agency (IEA) has said oil producers need to generate an extra crude output capacity of about 45mn bpd in the next 20 years to meet rising demand and offset a decline in major fields.
p>THE CHIEF ECONOMIST of the International Energy Agency (IEA) has said oil producers need to generate an extra crude output capacity of about 45mn bpd in the next 20 years to meet rising demand and offset a decline in major fields.
The bulk of the increase is expected to come from Saudi Arabia and other members of Opec as other supply sources have nearly reached their peak.
Opec would have the financial resources to add that capacity given the expected sharp rise in its earnings. Referring to IEA forecasts, Faith Birol said Opec's cumulative crude export income could reach a staggering US$23tn during 2008-2030, nearly four times the group's revenues in the previous 22 years.
"In the World Energy Outlook 2008, we carried out a very detailed analysis of the rate of decline of output at 800 oil fields that accounted for two-thirds of world oil production and contained three-quarters of global reserves," said Birol. "That study found there was an average rate of decline of 6.7 per cent a year at most mature fields. We then explained that, even if world oil demand remained flat between now and 2030, one would need to add 45mn bpd to existing production capacity to replace the decline at existing fields. The outlook for world oil supply thus represents a major challenge at the geological, technological, economic and financial levels.”
He estimated that about half the 45mn bpd will have to come from oil fields that have not yet been developed and the other half from fields that have not yet been discovered. "On the basis of this analysis, we estimate that conventional oil supply could reach a peak around 2020 if we do not discover new oil basins between now and then.”
