ecostory 69-2007
Growth quotes: "World will face oil crunch 'in five years'"

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Quotes only - from the below >article< - no comment.
  • The IEA said that supply was falling faster than expected in mature areas, such as the North Sea or Mexico, while projects in new provinces such as the Russian Far East, faced long delays. Meanwhile consumption is accelerating on strong economic growth in emerging countries.
  • Lawrence Eagles, head of the IEA’s oil market division, told the Financial Times: "If we get to the point were there is insufficient supply, the only way to balance the market will be through higher prices and a drop in demand."
  • Oil demand will grow at an annual rate of 2.2 per cent during the next five years...
  • UK oil production is set to suffer a dramatic decline from today’s 1.7m barrels a day to just 1.0m b/d in 2012... >article...
Environmental developments: (from CIA world factbook) - June 2007
  • Environment - current issues: large areas subject to overpopulation, industrial disasters, pollution (air, water, acid rain, toxic substances), loss of vegetation (overgrazing, deforestation, desertification), loss of wildlife, soil degradation, soil depletion, erosion; global warming becoming a greater concern
  • Land: 2,973,190 sq km - not growing
  • Population: 6,602,224,175 (July 2007 est.) - growth rate: 1.167% (2007 est.) The planet's population continues to explode: from 1 billion in 1820, to 2 billion in 1930, 3 billion in 1960, 4 billion in 1974, 5 billion in 1988, and 6 billion in 2000. [9 billion in 2050?]
  • Economic overview: [...] Global output rose by 5% in 2006, led by China (10.5%), India (8.5%), and Russia (6.6%). [...]
    GWP (gross world product): $65.95 trillion (2006 est.) GDP - real growth rate: 5.3% (2006 est.)
  • Natural resources: the rapid depletion of nonrenewable mineral resources, the depletion of forest areas and wetlands, the extinction of animal and plant species, and the deterioration in air and water quality (especially in Eastern Europe, the former USSR, and China) pose serious long-term problems that governments and peoples are only beginning to address.
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    Copyright notice We transcribed this article for reference purposes only.

    World will face oil crunch 'in five years'

    By Javier Blas, Commodities Correspondent July 9 2007 (Crude Surges...)

    The world is facing an oil supply “crunch” within five years that will force up prices to record levels and increase the west’s dependence on oil cartel Opec, the industrialised countries’ energy watchdog has warned.

    In its starkest warning yet on the world’s fuel outlook, the International Energy Agency said “oil looks extremely tight in five years time” and there are “prospects of even tighter natural gas markets at the turn of the decade”.

    The IEA said that supply was falling faster than expected in mature areas, such as the North Sea or Mexico, while projects in new provinces such as the Russian Far East, faced long delays. Meanwhile consumption is accelerating on strong economic growth in emerging countries.

    The problem is exacerbated by the fact that supply from non-members of the Organisation of the Petroleum Exporting Countries will increase at an annual pace of 1 per cent, or less than half the rate of the demand rise.

    The widening gap between rising consumption and lagging non-Opec supply will force Opec to sharply increase its production in the next five years.

    Lawrence Eagles, head of the IEA’s oil market division, told the Financial Times: “If we get to the point were there is insufficient supply, the only way to balance the market will be through higher prices and a drop in demand.”

    The IEA Medium Term Oil Market Report came as oil is approaching last year’s record high. Brent crude oil on Monday rose 72 cents to a 11-month high of $76.34 a barrel.

    Refineries are already paying record high prices as producing countries have cut the discount at which they sell their oil relative to Brent, according to an analysis by the FT. Most of the discounts had been reduced to levels not seen since 2004 and some even to six-years lows.

    Oil demand will grow at an annual rate of 2.2 per cent during the next five years, up from a previous estimate of 2 per cent, to reach 95.8m barrels a day in 2012. China, the Middle East and other emerging countries will lead the increase.

    Rex Tillerson, the chairman and chief executive of ExxonMobil, said recently that he thought non-Opec oil production was close to levelling off. He told the FT: “We still see capacity for a little more growth, but pretty modest, and then in our own energy outlook it begins to plateau. And that results then in this call on Opec.”

    UK oil production is set to suffer a dramatic decline from today’s 1.7m barrels a day to just 1.0m b/d in 2012, according to the IEA.

    The IEA estimates Opec would have to supply about 36.2m b/d in 2012, up from today’s 31.3m b/d. That would reduce the oil cartel’s spare capacity to a “minimal level” of 1.6 per cent of global demand, down from 2.9 per cent in 2007.

    Additional reporting by Ed Crooks in London

    Copyright The Financial Times Limited 2007

    Crude surges as producers slash industry discounts

    By Javier Blas in London July 10 2007

    The actual cost of crude oil has surged to a record high through a combination of world benchmarks rising and a sharp reduction in the discounts that large producers, such as Saudi Arabia, Iran or Mexico, are offering to refineries.

    The latest in a series of cuts to discounts - known as "differentials" in industry jargon - has cut the most important markdowns to the lowest level since 2004.

    The reduction has gone largely undetected outside the refinery industry because financial markets pay more attention to the price of the oil futures traded in London and New York, where prices have come within $2.50 of record highs. The reduced discounts reflect a tighter oil market after two cuts in production by the Organisation of the Petroleum Exporting Countries in the past year and its recent rejection of calls from industrialised nations to increase supplies.

    Strong refining margins and more refining capacity to process low quality oil have also given producing countries the opportunity to cut discounts.

    Lawrence Eagles, head of the International Energy Agency markets division, said: "We are seeing more refinery flexibility to process heavy, low quality oil."

    Oil-producing countries sell their oil to refineries and trading houses at a discount or, in the case of high quality grades, at a premium, to Brent and West Texas Intermediate, the world benchmarks.

    In recent years, oil producing countries offered large discounts for their heavy, sour, low-quality oil to make it profitable for refineries to process it. Heavy oil produces low added value products, such as fuel oil, while light, high-quality oil produces more petrol and diesel.

    Supply disruptions in Nigeria and lower production in mature areas, such as the North Sea, have also contributed to the cuts.

    Frédéric Lasserre, head of commodities at Société Générale in Paris, said: "In a situation of scarcity of oil, discounts are always reduced."

    Iran yesterday became the latest country to cut its discounts, after adjustment by Saudi Arabia last week.

    Iran narrowed its main crude grade discount to European refineries by25 cents a barrel to $2.60 a barrel, the lowest since September 2004.

    Saudi Arabia cut the discount on its main stream, known as Arab Light, to European refineries to $3.20 a barrel, from a $6 a barrel average in 2006, its lowest level since late 2004. The discount to US refineries is at its lowest point in more than three years.

    Nigeria, where high quality crude oil commands a premium rather than a discount because refineries can obtain more petrol from it, has doubled its mark-up compared with last year. The premium on Bonny Light oil, the main Nigerian oil export, has risen to $2.90 a barrel, from an average of $1.50 in 2006. The Nigerian premium is now at its highest level in six years.

    Copyright The Financial Times Limited 2007

    Copyright notice We transcribed this article for reference purposes only.