Invest in oil capacity: report
Calls for $3 trillion in new spending Mideast, N. Africa are singled out
NEW YORK—
Oil prices will keep rising over the next two decades unless the oil- rich nations of the Middle East and North Africa substantially increase investments in their energy sectors, warns a new report to be released today by the organization that represents energy-consuming nations. The World Energy Outlook, an annual publication that outlines long- term forecasts by the International Energy Agency in Paris, calls on producers like Saudi Arabia to expand their investments to meet a projected 40 per cent jump in oil demand by 2030. To meet these needs, the agency estimates that $3 trillion ( U. S.) is needed for oil exploration, development and refining worldwide during the next 25 years.
Middle East and North African producers will need to double their investments to $23 billion a year, or more than $ 614 billion — twice the average annual amount spent over the last decade in these regions, according to the report. But the agency acknowledged that some countries might not be willing to invest in higher output. Instead, they may seek to curb their output growth, leading to higher oil prices.
“ If these countries do not increase their investments substantially, we will end up with difficulties on the energy markets,” said Fatih Birol, the energy agency’s chief economist. ‘‘We may end up with much higher prices.”
Birol, in Paris ahead of the report’s release, said, “ The issue in the oil business today is not the reserves but the money, the investment decisions, the investment climate.’’ The energy agency acts as a policy adviser and forecaster for industrialized nations, and its reports are widely read by governments worldwide and the energy industry. But the agency’s political bias toward oilconsuming nations sometimes leads it to produce assessments that some consider unrealistic.
For example, under the agency’s model, Saudi Arabia would need to bring its production up to 18 million barrels a day by 2030 to meet the jump in demand. Today, it produces about 10.5 million barrels a day. But oil- producing nations can be wary of allowing major foreign investments in their national oil sectors. They may fear creating a glut in supplies that would lead to lower prices, or they may doubt bullish projections for demand.