|The East plant of the Texas City refinery in the USA, at dusk. © BP p.l.c.
The International Energy Agency (IEA) may revise downward its forecast of a 21% fall in global energy sector investment, its chief economist Fatih Birol, said on Monday. Oil producers may have cancelled or delayed $170 billion worth of investment in recent months.
The Paris-based IEA is the energy adviser to 28 industrialised countries including Ireland.
"Our calculations show that investments in 2009 will drop 21% from 2008, that is by $100 billion. I am even afraid we will have to make a downward correction of it this year," Birol told Polish newspaper Rzeczpospolita, in an interview.
Birol said prices could return to the record high of last July of $147.50 a barrel, once the global economy recovers, as energy demand recover and the supply lags due to insufficient capacity.
"In recent months, petrol groups have cancelled or postponed about $170 billion in investment, he said, adding that the cancelled and postponed projects cut production by 6.2 million barrels a day," he said.
Saudi Arabian oil minister Ali al- Naimi said the price of oil will climb to $75 a barrel when demand picks up.
“We’ll get there eventually,” al-Naimi told reporters in Rome at a meeting of energy ministers. “The trick is keeping it between $70 and $80. It will be achieved as demand rises and the fundamentals are better than they are now.”
To reach that goal, Naimi said he will recommend OPEC oil cartel members to “stay the course” at their meeting in Vienna on May 28th. Saudi Arabia is the biggest of the cartel's producers. OPEC is responsible for about 40% of the world’s oil output.
Daily global oil production is about 83 million barrels a day, according to the IEA, which has also has forecast demand will drop by 3% this year, the sharpest fall since 1981.
Birol said oil investment was hit hardest in North America and the North Sea, while the Middle East was relatively spared since production costs are lower there.
Energy ministers from G8 countries on Sunday met in Rome with representatives from 15 other emerging and oil-producing countries. Ministers from the Group of Seven industrialised countries and Russia, which is part of the G8, focused on the fall in investment in oil projects due to the crisis.
Electricity demand is expected to diminish by 3.5% this year "for the first time since World War II," said International Energy Agency (IEA) executive director Nobuo Tanaka.