IEA chief sees slide in global oil output

IEA chief sees slide in global oil output

Oil-producers could follow US lead and halt development of new offshore projects.

June 19, 2010 9:41 by Samuel Potter

Global oil output could slide by up to 900,000 barrels a day from projected levels for 2015 if oil producing countries follow the US lead and impose moratoriums on development of new offshore oil reserves, International Energy Agency executive director Nobuo Tanaka said Friday.

The Paris-based organization is conducting research on the possible impact of the US moratorium and its implications worldwide, Tanaka said, Dow Jones Newswires reported.

“If other countries like Angola, Brazil and the North Sea (countries) put on hold new offshore development and there is also one or two years of delay, the impact on global oil output might be 800,000 barrels a day to 900,000 barrels a day by 2015,” Tanaka told Dow Jones.

He was speaking in the western Japanese city of Fukui, where he will take part in a meeting of Asia Pacific Economic Cooperation group energy ministers this weekend.

Although the decline would represent about one percent of global oil output, “given that spare oil production capacity is about six million barrels a day, (a drop of) roughly one million barrels a day can’t be ignored,” he said.

Oil and gas companies began shutting down 33 deepwater exploration rigs last month after US President Barack Obama imposed a six-month moratorium on developing new deepwater wells in the Gulf of Mexico.

“There is little near-term impact. But for the medium term, if new offshore oil development in the US is delayed by one or two years, the impact (on production) would be 100,000 barrels a day to 300,000 barrels a day by 2015,” Tanaka said.

“The ultimate impact is unclear. But it would take time to investigate the causes of the spill and develop appropriate safety requirements and procedures,” he said.

At the three-day APEC meeting, ministers and government officials will discuss energy security, sustainable development of energy resources and the adoption of renewable sources, Dow Jones said.

Meanwhile, US crude oil prices edged up in choppy trading on Friday, wavering along with US equity markets while traders considered the danger of slowing Chinese demand versus longer-term deepwater supply risks.

“The 200-day moving average, $76.83 is still acting as a magnet. The market has had nice ride and we’re consolidating now before the next big move,” said Stephen Schork, president at the Schork Group in Villanova, Pennsylvania.

At 12:37 p.m. EDT (1637 GMT), US crude futures for July rose 8 cents per barrel at $76.87 a barrel, with prices still trading on either side of their 200-day moving average.

The front-month North Sea Brent futures contract, now August, was down 44 cents at $78.24 a barrel, having traded as low as $77.25 earlier.

Front-end US prices held firmer relative to products and longer-dated futures reversing Thursday’s trend. On Thursday products surged on refinery glitches and signs of improving demand .

Oil prices earlier fell as low as $75.56 a barrel after a central bank adviser in China said growth is expected to slow in the second half of 2010 and double-digit growth for the full year is unlikely.

- Arab News