IEA warns of big flow drop from driling ban

THE INTERNATIONAL ENERGY Agency (IEA) estimates an extended global moratorium on new drilling could cut potential world offshore output by 800,000 barrels to 900,000 bpd by 2015.

The IEA's executive director, Nobuo Tanaka, told Reuters in an interview that the oil spill at BP's Deepwater Horizon drilling rig in the Gulf of Mexico, would raise costs, delay new projects and prompt a thorough review of offshore regulation.

The IEA is confident in its estimate that 100,000 bpd to 300,000 bpd could be lost if new projects in the Gulf of Mexico were delayed by one or two years until 2015, said Tanaka.

"If the same one-year or two-year delay happens globally, to global offshore drilling new projects, if that happens, we calculate it is about 800,000 bpd to 900,000 bpd," he said.

Tanaka said it was hard to say how likely such a steep reduction would be.

"Is it 50 per cent or less than 50 per cent? It's very difficult to say. If things go wrong, it could have a very serious impact."

He said spare capacity would be about three million bpd.

"If one million bpd is struck out from the market, it's big. It may have a huge impact in the mid to the long term. Premium insurance is moving up, many countries are reviewing regulations and are trying to find out if they may have a similar problem in their operations."

Tanaka also said there were still downside risks to the global economic recovery, which may prompt the IEA to revise down its global oil demand growth forecast for 2010.

The Paris-based agency, which advises 28 industrialised countries, last week raised its global demand growth forecast by 70,000 bpd to 1.68 million bpd from its estimate last month.

A oil price rise to $80 a barrel from the current mid-$70s would also potentially harm global growth.

"There are some downside risks globally. If that is the case, if the price is moving much faster and higher, that may have a very detrimental impact to the economic recovery," he said.

Tanaka was in Fukui city, northwestern Japan, ahead of a Saturday one-day gathering of Asia-Pacific Economic Co-operation (APEC) Ministers.

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