Despite expectations, Opec dramatically cut its estimates for the amount of oil it will need to produce by 2030.
Opec cuts 2030 oil estimates
In defiance of international expectations, Opec yesterday dramatically cut its estimates for the amount of oil it will need to produce by 2030 and sounded a cautious note on production capacity increases. On releasing its annual petroleum outlook, the group estimated that although world demand for oil was expected to rise to 113 million barrels per day (bpd) by 2030 from roughly 82 million bpd today, Opec would only need to produce an additional 12 to 13 million bpd - six million bpd lower than last year's numbers.
The organisation expects to produce a similar proportion of the world's oil to what it does today, with additional demand being satisfied by increases in non-Opec production, development of non-conventional sources such as the oil sands in Canada, increased production of biofuels and greater production of liquid fuels from natural gas. Opec currently produces about 40 per cent of the world's oil. "The key issues are not related to the availability of resources," said Mohammed Hamel, the head of Opec's energy studies department. "Over the medium term, we see little room for additional Opec crude."
He added: "There is a real potential for wasting resources in capacity that is unneeded." In the short term, Abdulla el Badri, the secretary general of Opec, said the group had "no silver bullet" for current oil prices, and reiterated Opec's long-held position that high prices were due to a weak US dollar, an inflow of speculative investment, refinery bottlenecks and "the geopolitical situation", including the prospect for a disruption of Iranian production.
"Prices we are seeing at this time are being hijacked by speculators," he said. Although he said Opec was currently producing more than enough oil to satisfy the market, he pointedly declined to rule out the possibility of a production increase at the group's regular meeting in Vienna in September. "September is still a long time away," he said. Mr Badri was particularly concerned about the effects of a possible conflict between Israel or the US with Iran.
"If something happens, it is impossible to replace the production of Iran," he said. In its monthly oil report yesterday, the International Energy Agency, which represents the interests of 27 oil consuming countries, pointed out that crude inventories in developed countries were much lower than normal for this time of year, indicating a "tight" market. Both Mr Badri and Opec's official report emphatically rejected suggestions that the world was running out of oil in the long term.
"All in all, the reserves are about 4.5 trillion barrels, and so far the world [has] only produced one trillion, so there are plenty of reserves left," he said. Those numbers reflect greater rates of recovery from oilfields with high levels of investment and future technology, and increases in production from non-conventional sources of oil such as shale oil and oil sands. The BP Statistical Review, which is considered a benchmark estimate of world reserves, put the amount of proven conventional oil reserves in the world at the end of last year at 1.23 trillion barrels, with an additional 152 billion barrels coming from Canadian oil sands deposits.
Proponents of peak oil theory - who believe the world has, or will soon, see declines in oil production - criticise both estimates, saying they are much higher than actual recoverable reserves. In the shorter-term, the IEA said yesterday that demand for oil would continue to grow this year, despite decreases in developed countries, because of a continued appetite for transportation fuels in China and the Middle East.
"Oil product demand in the Middle East continues to expand unabated, pulled by buoyant economic growth, favourable demographics, very low retail prices and occasional shortages in alternative energy sources [natural gas]," the report said. The report said demand across the region would grow from 6.9 million bpd this year to 7.2 million bpd next year. That represents growth of 10.7 per cent between last year and next year.
The report said that growth had largely been driven by a need for more petrol and diesel in Iran and Saudi Arabia. email@example.com