Eric Watkins
OGJ Oil Diplomacy Editor
LOS ANGELES, July 27 -- The global economy’s reliance on oil supplies from the Organization of Petroleum Exporting Countries, especially its Middle Eastern producers, will continue to rise over the medium to long term, according to the head of Paris-based International Energy Agency.
“It’s inevitable,” said IEA Executive Director Nobuo Tanaka, who also warned of an “unsustainable” future both economically and environmentally if more investment is not made in alternative energy resources. Tanaka’s remarks came in an interview with Market News International (MNI), a publication of the Deutsche Borse Group.
Asked about the risks from the exhaustion of non-OPEC fields, Tanaka told MNI it is “inevitable” that oil supply from non-OPEC countries will decline and that even the added injection of supplies from Canada’s oil sands exploration will not be enough. “The dependency on the Middle East countries, especially OPEC countries, will increase from the medium to long term,” he said.
Tanaka’s remarks underlined statements he made last month that cooperation between the IEA and OPEC was progressing. “There is a new cooperation with OPEC concerning the outlook, how we can calibrate our outlooks and compare notes on our assumptions,” Tanaka said, adding, “This is very new…aiming at giving transparency, and certainly it is a very, very important and good way to further strengthen our cooperation.”
At the time, Tanaka noted that OPEC and the IEA occasionally meet to compare notes on market conditions. “This type of communication is a very important one because the problem of the market is uncertainty, which we have with climate or the weather or long-term challenges from economic prospects or geopolitical uncertainty,” Tanaka said. “We must try to avoid as much as possible these uncertainties and that is a common interest for us all, and we will continue to do this,” he said.
Meanwhile, Tanaka painted a gloomy picture of current oil production, telling MNI that each year output from existing oil fields declines by 3 million bbl, while demand increases by 1 million bbl. To keep pace, the oil sector will require “massive” investment of some $5 trillion from now to 2030.
However, Tanaka said that even with a “radical revolution” in energy resources, the world's reliance on fossil fuel will remain at 46% by 2050, a fact that makes investment in both the conventional and non-conventional oil sector “very, very important” for future economic growth.
Contact Eric Watkins at [email protected].
Rystad Energy.
