|OPEC may not be able to meet oil demands
|Experts warn of an oil supply crisis in the next two decades
Oil markets could be headed for a supply crisis in the next two decades as non-OPEC production will soon stagnate and major OPEC producers will not be able to meet soaring demand, experts said.
"I think we have already started to feel the [supply] crisis," said Jean-Pierre Favennec, director of the Center for Economics and Administration at the Institut Francais de Petrole.
Five major Gulf producers are required to pump 51.8 million barrels per day (bpd) by 2030 or 43 percent of global demand of 121.3 million bpd, according to International Energy Agency (IEA) projections, he said.
"But these countries [Saudi Arabia, Kuwait, United Arab Emirates, Iran and Iraq] can pump a maximum of 38 million bpd by that year," Favennec told AFP on the sidelines of an oil and gas conference.
The three-day conference, titled "Gulf oil and gas: ensuring economic security", is organized by the Emirates Center for Strategic Studies and Research to explore future trends in the oil industry.
A rapid increase in demand by emerging economies, especially China and India, is responsible for the overall surge in global demand for oil, Herman Franssen, president of International Energy Associates, U.S., told AFP.
"Currently, five billion people in developing countries use two barrels of oil per year, while people in developed nations use 18 barrels per year on average," he said.
If the Chinese and Indians increase consumption from two to four barrels a year, that would cause global demand to rise 85 million bpd, which is the entire world production at present, Franssen said.
Fear over future supply shortages is further strengthened by the fact that neither Iraq nor Iran are in a position to raise their output substantially in the near future and non-OPEC production will cease to increase soon.
"Non-OPEC production is expected to reach a plateau in the middle of the next decade. Iran is not in a position to increase and Iraq is constrained by security problems. So, the focus will be on Gulf Cooperation Council (GCC) states," Franssen said.
Holding about 45 percent of proven world reserves, the six-nation bloc needs tens of billions of dollars to raise their output capacity to meet the required supplies.
Franssen however, doubted if the GCC nations would want to boost output substantially.
"I think it is in their interest to raise output by a few million bpd and preserve their oil wealth over a long period rather than diminishing their reserves fairly quickly by boosting production substantially," he said.
Kuwait's national representative at OPEC Nawal al-Fezai said the level of prices and security of demand will determine the size of expansion in GCC production.
"GCC states have abundant reserves and can raise output, but we must first see the level of prices and if there is sufficient demand. We can't produce oil that has no buyers," she told AFP. Favennec told the conference that if every citizen of the world's six billion population consumes oil as a U.S. citizen does, oil resources will be good for only eight years.
But if they consume like citizens of Senegal, for example, oil will last for more than 100 years, he said. "So, the key issue here is the need to reduce oil consumption in order to avoid a major supply crisis," Favennec said.
The Daily Star