World needs a Kuwait a year to meet demand, IEA says

LONDON (Bloomberg) -- The world must find an extra 64 million barrels a day of oil production by 2030, equivalent to replacing Kuwait’s output every year, to meet demand growth and counter the decline of existing fields, the International Energy Agency said.

The agency, an adviser to 28 nations, forecasts global oil demand will rise by 1 percent a year through 2030, while the output decline at existing fields will accelerate to 8.6 percent from 6.7 percent. There must be “adequate and timely” investment in global oil output for supplies to suffice, the Paris-based IEA said in its annual World Energy Outlook published on Wednesday.

“There remains a real risk that under-investment will cause an oil-supply crunch” by 2015 as the decline in output from mature oilfields speeds up, the Paris-based adviser said. “The gap now evident between what is currently being built and what will be needed to keep pace with demand is set to widen sharply after 2010.”

An additional 64 million barrels a day of additional production must be bought on stream between 2007 and 2030, the group said. That is about 2.78 million barrels a day every year. Kuwait currently produces about 2.6 million barrels a day, according to Bloomberg estimates.

The IEA published the executive summary of Wednesday’s World Energy Outlook on Nov. 6 and is due to publish the full report later on Wednesday in London.

-----------------------------Saudi output

Saudi Arabia, the largest member of the Organization of Petroleum Exporting Countries, is projected to pump 15.6 million barrels a day in 2030, the agency said. The kingdom produced 9.35 million barrels a day last month, according to Bloomberg estimates.

Russia’s oil production will be 9.5 million barrels in 2030, the report said. Iraq will become the second-largest producer in the Middle East, pumping 6.4 million barrels a day in 2030 and overtaking Iran, forecast to produce 5.4 million barrels a day.

Kuwait’s output will rise to 3.3 million barrels a day, the United Arab Emirates to 3.9 million and Qatar to 3.5 million.

The world will need to invest more than $26 trillion, almost twice the U.S.’s annual domestic product, by 2030 to ensure energy supply, the agency said. Oil consumers will find themselves more reliant on Saudi Arabia and other members of the Organization of Petroleum Exporting Countries as oil fields in Europe, Russia and North America decline.

------------------------------Energy demand

Global energy demand to 2030, including oil, natural gas and coal, is set to grow 1.6 percent a year to 17.01 billion tons of oil equivalent, “just over half” of this accounted for by India and China, it said.

The agency cut its global oil demand estimate for 2030 by 10 million barrels a day, to 106 million barrels, “reflecting mainly the impact of much higher prices and slightly slower GDP growth.”

The impact of the global financial crisis on demand won’t be sufficient to offset rising demand in developing countries, led by China and India, the agency said.

“The current financial crisis is not expected to affect long-term investment, but could lead to delays in bringing current projects to completion,” according to the report.

The world may face a “supply crunch” sooner than expected if investment in new production is delayed, IEA Chief Economist Fatih Birol said at a briefing to launch the outlook.

Oil prices, which have dropped by more than half from a record $147.27 a barrel in July, may exceed $200 a barrel in nominal terms in 2030, the agency said. Global oil demand growth will average 1 percent a year in the period, with all of the increase coming from developing economies.

-----------------------------OPEC share

OPEC’s share of the world oil market, provided those nations invest in new supply, will rise to 51 percent in 2030, from 44 percent last year, the IEA said. Production “has already peaked in most non-OPEC countries and will peak in most others before 2030,” it said.

Spending on new oil and gas production sector already exceeds the amount required if investment were channeled to the lower cost regions such as the Middle East, the IEA said.

Companies will raise upstream budgets about 9 percent a year to $600 billion in 2012, it said. They spent $390 billion last year, compared with an average $350 billion needed annually to 2030.

The IEA will publish its monthly Oil Market Report on Thursday.

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