Friday, 09 October 2015  -  25 Dhul-Hijjah 1436 H
Select Issue :  close

MENA oil, gas spending delay to push oil prices to $150

LONDON – Delaying expected oil and gas investment in the Middle-East and North Africa by just a third would push prices to $150 a barrel, the International Energy Agency (IEA) warned Wednesday.
In its annual energy outlook, the IEA warns that “if between 2011 and 2015, investment in the MENA region runs one-third lower than the $100 billion a year required, consumers could face a near-term rise in the oil price to $150” a barrel.
That’s because increased production in the Middle East and North Africa will cover more than 90 percent of the extra barrels needed worldwide through 2035.
Oil price Monday climbed to around $95 per barrel for the first time since early August on hopes that Greece will adopt the spending reforms it needs for an international bailout package and avoid default.
Benchmark crude rose 62 cents to $94.89 per barrel at midday in New York, while Brent crude rose $2.02 to $113.99 in London.
Investors were relieved by the reduced chances of a default in Greece, which could have led to bank failures across the eurozone. That might have pushed the region’s economy into recession and weakened demand for oil.
Still, economists remain wary. Their attention is now focused on the wobbly economy of Italy, which also faces huge debts and slow growth.
Back in 2008, a spike to an all-time high of $147 a barrel blamed by some economists for exacerbating the global financial crisis.
Yet “it is far from certain that all of this investment (needed from the MENA region) will be forthcoming” to keep oil below that level, said the agency, which represents the world’s largest consumers. It cited increased political instability, conflicts damaging oil infrastructure, international sanctions and resource nationalism as key risks to spending.
This year, the overthrow of three Arab regimes and turmoil elsewhere in the region showed such risks are far from being academic.
In Libya, a civil war interrupted most production and investments for eight months and damaged key oil terminals. The increased emphasis on risk in the region underscores the lasting impact of the Arab uprisings on the oil-rich area.
Iraq will be the largest source of new production additions. Providing investments aren’t delayed, the IEA expects its output to reach 5.4 million barrels a day in 2020 and 7.7 million barrels a day in 2035, compared with about 2.7 million barrels a day today. The numbers are lower, however, than Iraq’s own plans to reach a capacity of 6 million-8 million barrels a day before 2020. Production from Saudi Arabia is expected to grow by almost 40 percent to nearly 14 million barrels a day by 2035, it said.
The IEA also predicts production in Iran will be hindered by sanctions and tough investment terms with the Islamic Republic only adding 600,000 barrels a day in production by 2035.
Western consumers are paying more for oil out of fear for their future supply. But at the same time, OPEC acknowledged Tuesday that its members needed higher oil prices to cover their social spending.
The agency’s main scenario sees oil-import prices still rising to $118 a barrel in real terms in 2020 and $140 a barrel in 2035.
Overall, the IEA, which represents the view of oil consumers, normally has higher oil-demand expectations than producers group OPEC. But under its main scenario, which takes into account new measures to cut energy consumption, the IEA sees global demand for oil at 92.4 million barrels a day in 2020 and 99.4 million barrels a day in 2035.
That’s less than OPEC’s working assumptions released Tuesday, with respectively 97.8 million barrels a day and 109.7 million barrels a day for these dates. — Agencies
  Print Print   Post Comment Post Comment
Comments Closed
- All Comments posted here reflects the opinion of the visitors
- We call on all our readers and visitors to stay away from comments that are offensive or meaningful to a person or entity in any way.
Your Name
Your Email
Friend's Name
Friend's Email
AlNadi Digital
Souq Okaz
3Alyoum Shows
Saudi Gazette