Fatih Birol, Chief Economist, International Energy Agency (IEA) presentation to the Council on Foreign Relations following the release of the IEA’s Energy Outlook 2011.
Fatih Birol comments on:
Energy efficiency “2009-2010 global energy efficiency worsened.” 16:20
Energy & water (topic of next year’s WEO) 32:00
Oil price & inventory 47:10
There is also a new article covering a recent interview with Olivier Rech, formerly of the IEA. He was responsible for petroleum issues at the International Energy Agency from 2006 to 2009. The following is an excerpt from the article commenting on the rate of decline in existing oil fields production. Link to article.
What do you foresee? Let’s begin with the non-OPEC producers (which represent 58% of production and 23% of global reserves).
Outside OPEC, things are clear: of 40 million barrels per day (mb/d) of conventional petroleum extracted from existing fields, we face an annual decline on the order of 1 to 2 mb/d.
In your view, are we therefore close to the 5% decline per year from existing production mentionned by Royal Dutch Shell?
Yes, that’s about it.
Note that loses from just the non-Opec producers each year is very close to the annual exports of Iran which are currently just over 2 mb/d. So why are the oil markets all upset about the potential loss of Iranian oil exports with an embargo when they lose that volume every year to depletion? They should be and if Olivier Rech is right by 2015 or so they will be.
Don’t take your eyes off of Nigeria
While the world’s attention is on Iran and the Straits of Hormuz it is easy to overlook events in Nigeria. However there are significant risks to the global supply of light crude produced in Nigeria. It is important to remember that the Nigerian supply has been helping fill the supply hole from Libya. According to the EIA the in 2010 Nigeria was the fourth largest source of U.S. imported crude oil providing over 1 mb/d or more than 10% of total net imports. What happens in Nigeria is very important to U.S. crude oil supplies. [EIA Nigeria Country Analysis Brief]
January 1st the government cut subsidies that had been holding the cost of fuel at $1.55/g resulting in more than a doubling of the price. The public outrage that has followed was to be expected. Why it was done so quickly and without a phased withdrawal of the subsidy has not been explained. The question now is whether the economy, government and Nigerian society will hold together long enough to adjust.
If the government fails to stabilize the situation the oil industry and its exports will quickly become a target of the unrest. If the world had an abundant surplus supply of crude oil these events wouldn’t matter but as Fatih Birol mentioned in the video and the excerpt in this week’s report from Javier Blas supported that is not the state of global supplies today.