China and the Middle East, spurred by lower prices and ample supply, will drive global natural gas demand growth in the next 25 years as consumption in Europe fails to recover to peak levels seen in 2010, according to the worldwide Energy Agency. The Paris-based group, which consults 29 oil-importing nations, is a well-respected oil-market forecaster.
Advertisement
“It would be a grave mistake to index our attention to energy security to changes in the oil price”, IEA Executive Director Fatih Birol said in a written statement.
Just like high oil prices can’t last, a prolonged period of low prices is “also unsustainable, as it will induce large investment cuts and reduce the resilience of the oil industry, undermining the future security of supply and setting the scene for another sharp price rise”, the prince said.
Crude-oil prices surrendered earlier gains in Asia trade on Wednesday as expectations for US crude stockpiles to build spurred profit-taking ahead of the official data release. It has plunged 8.4 percent since November 3 as fresh worries about global demand weigh on the market.
The IEA said oil was unlikely to return to US$80 a barrel before the end of the decade, despite cuts in investment, as annual demand growth struggles to top 1 million barrels per day.
In midday deals in London, Brent North Sea crude for December won 51 cents to $47.93 per barrel.
All told, the IEA said, the world’s daily oil demand could grow by 900,000 barrels each year, though the projected climb of global demand to 103.5 million barrels a day in 2040 could be offset if prices rise and governments adopt more policies pushing the use of alternative fuels. Projects totalling almost five million barrels a day have been deferred or cancelled, he said. “But, perhaps even more importantly, this decline will continue next year as well”.
Both regions will become larger consumers of gas than the European Union, the IEA said in its World Energy Outlook 2015 published today (Nov 10).
“From a position as a perceived safe bet, China is becoming the wild card of coal markets, with the risks to our projection of a plateau and then a slow decline in coal demand arguably weighted to the downside”, the IEA said.
Low near-term global economic growth and a lasting switch by OPEC to a policy of pumping oil at record rates to increase its market share and more resilient non-OPEC supply could conspire to keep the oil price lower for longer.
The IEA estimates investment has already fallen by 20 percent this year.
Advertisement
To meet its energy targets, though, India must secure $2.8 trillion to invest in supply by 2040, and also clear significant environmental hurdles.
