Sam Fletcher
Senior Writer
HOUSTON, May 8 -- Energy demand is growing in developing countries that may be hindered by the lack of investment in exploiting their own energy resources, said a panel of industry experts at the opening of the 4-day Offshore Technology Conference in Houston.
That demand is growing fastest in China and India, with their burgeoning populations.
But in focusing on India and China, "we may be forgetting other parts of the world," warned Matthew R. Simmons, president and founder of Simmons & Co. International, who mediated the invitation-only 2002 OTC Energy Roundtable on Monday.
The combined populations of the 13 member countries of the Organization of Petroleum Exporting Countries, plus Mexico, have escalated to some 600 million today from 180 million in 1970, said Simmons at a press conference following that 4-hour session.
"By 2030, their [combined] population could be larger than [that of] India," he said. "History shows that countries only begin to slow their population growth after they become prosperous."
Saudi demographics
Simmons said, "The demographics of Saudi Arabia is startling. People think of Saudi Arabia as this big empty area with no people. But its population has grown from 6 million in 1970 to 9 million in 1980, 14 million in 1990, and 22 million in 2000." It's "not unlikely" that Saudi Arabia could have a population of some 40 million in 2010-15 "because all of the (future) parents are alive today," he said.
Such rapid population growth will be especially stressful in a desert country that depends on desalination units to supply much of its water from the sea. To supply its projected future population, Saudi Arabia would have to increase its available water by 15-20% through desalination units that each has "the energy consumption of a steel mill," said Simmons.
What's more, he said, Saudi Arabia now has a 20% unemployment rate that is likely to double over the next 10 years. That in turn could create an atmosphere for social unrest against the pro-US royal family.
Any attempt to factor in "geopolitical events" that might possibly trigger an anti-US bias within governments of oil producing countries such as Saudi Arabia "is only speculation," acknowledged Simmons.
"But it's worth remembering our experience (in the late 1970s) with Iran," he noted. "When unrest came, it was almost overnight, and Iran shut off its oil."
It didn't matter that oil was Iran's primary source for outside revenue from world markets. "They [the leaders of that revolution] looked at oil revenues as that of the devil, and they wanted to get that devil out," Simmons said. In his published writings, Osama bin Laden takes much the same view, "so I'm told."
Outlook
In an annual report released in March, the US Energy Information Administration projected global energy consumption will increase by 60% over the next 20 years, with much of that growth expected in the developing countries.
"In 1999, developing nations consumed 58% of the amount of oil consumed in the industrialized world, but by 2020 they are expected to consume almost 90% as much oil as the industrialized world," EIA reported (OGJ, Apr. 15, 2002, p. 26).
Regions of Asia—China, India, and South Korea—and of Central and South America will be hot spots for future demand growth, with consuming patterns increasingly similar to that of industrialized nations, EIA officials predicted. Those areas are expected to account for about half of the projected new increment in world energy consumption and 83% of the increase for developing countries.
Data lacking
One problem in planning future energy supplies and demand, however, is that there is "not a lot of good data" on exactly how much oil and gas is being produced or how much energy is being consumed worldwide, said Simmons.
Many of the world's biggest oil fields—located primarily in the Middle East—are aging, with production likely in or near decline. The 14 largest oil fields, in terms of current daily production, were discovered prior to 1950, Simmons said.
There is no accurate information publicly available on when production from those fields would peak or how rapidly it might fall off. "The Middle East countries keep their oil field information buttoned up," Simmons observed. But even their vast reserves are finite, "unless you subscribe to the theory that oil recreates itself and somehow bubbles up from somewhere below."
He said, "Over the last 30 years, world oil demand has grown by about 25 million b/d, and maybe 60% of that has come from offshore." But maintaining that level of supply over the next 20 years will be difficult at best, especially from conventional sources.
"Many [of the roundtable participants] said, 'Thank goodness for unconventional oil resources, such as oil sands,'" Simmons reported. Such resources will become a bigger factor in supplying the world's growing demand in the future, "unless demand peters out, which means our economy will have petered out."
Other participants in the roundtable discussion were Luis E. Giusti, senior advisor, Center for Strategic & International Studies, Washington, DC; Clive Brown, minister for state development, Western Australia; Jean-Francois Giannesini, director and chief engineer, Institut Francais du Petrole, France; Marianne Kah, chief economist, ConocoPhillips, Houston; Masaaki Mishiro, director, Office of Oil Markets, International Energy Agency, France; Melanie Kenderdine, vice-president, Gas Technology Institute, Washington; Gert Jan Kramer, chief executive, Fugro Worldwide, the Netherlands; Ed Morse, executive advisor, Hess Energy Trading Co., New York.
Contact Sam Fletcher at [email protected]
