Fatih Birol, head of International Energy Agency, said a dearth of investments can start hurting global oil supplies from the first part of the next decade as production at ageing fields falls amid robust energy consumption worldwide.
“This growth in oil output is not enough to feel there will be enough production in the future because of two reasons,” Birol, IEA’s executive director, said at a press conference on the sidelines of the International Energy Forum conference in New Delhi today. “One, global oil demand is still growing very strongly. Second, some of the mature fields are in a decline.”
He expects global crude oil demand to grow by 1.5 million barrels each day but added that the peak demand for oil is unlikely to be seen soon.
“Every year, we are losing 3 million barrels per day and investments are not coming through,” Birol said. “In 2018, our investment expectation is only 40 percent of what we have seen in 2014, before the collapse of investment.”
Meanwhile, the U.S. is ramping up production of shale oil, and about two-thirds of global oil demand is expected to come from the U.S. in the next five years, Birol said.
“This is a game-changer and, of course, established oil producers would like to see a different picture,” he said. “But the U.S. is coming very strongly. So is Canada, so is Brazil, among other countries.”
Birol said India remains vulnerable to sharp rallies in oil prices. “It is very important for the Indian economy that we don’t see price spikes,” Birol said. “India will continue to need oil and gas for many years and need to see affordability.”
Higher gas prices, he said, may lead consumers globally to scout for alternatives such as coal.