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World oil market may undergo shortage crisis

03 August 2009 12:49 (UTC +04:00)

Baku. Vahab Rzayev â€“ APA-Economics. The lead economist with the International Energy Agency (IEA) said today that depletion from existing oilfields is more than twice what it previously predicted, adding that as exporting countries are not investing enough to keep up supply shortages are likely in the next few years.

Fatih Birol said the IEA is now predicting that global production is likely to peak in 10 years, rather than 20 or more, according to its latest assessment of the 800 largest oilfields in the world.

The assessment found that production at most of the top fields has already peaked and decline from those fields is now averaging 6.7% instead of 3.7% as predicted by the IEA in 2007, Birol told the London-based daily newspaper the Independent in an interview published today.

To keep up, the world would have to find the equivalent reserves of four new Saudi Arabias, and to meet expected new demand expected by 2030 the world would have to find six new Saudi Arabias, according to the report.

But the top oil exporters are not investing enough to find and develop new reserves, Birol told the Independent.

The combination will lead to a supply crunch and price spike and a boost in political pull of those countries that export oil.

Birol said the coming shortages threaten world economic recovery and should worry Western powers whose economies depend on more oil than the countries themselves produce.

"Many governments now are more and more aware that at least the day of cheap and easy oil is over... [however] I’m not very optimistic about governments being aware of the difficulties we may face in the oil supply," he said in the interview.

The governments should already be preparing for a post-oil future, he said.

"One day we will run out of oil, it is not today or tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves us, and we have to prepare ourselves for that day," Birol told the newspaper.

"The earlier we start, the better, because all of our economic and social system is based on oil, so to change from that will take a lot of time and a lot of money and we should take this issue very seriously."