OSLO - The global oil sector is investing enough and there is sufficient oil supply, the head of the International Energy Agency said Wednesday and added that she hopes the high oil prices hampering economic recovery will fall.
"The strange thing is that nobody can say the supply is not sufficient," Maria van der Hoeven said. "I really do hope, but it's a hope, that the prices will be adjusting in a different way."
Except for a couple of months, Brent oil prices have been above $100 a barrel for two years, significantly increasing the bill for oil importers, while boosting the earnings of oil exporters. Organization of the Petroleum Exporting Countries' oil-export revenues reached a record $1.1 trillion in 2011, according to the IEA.
"What we've mentioned more than once is that [the oil price] has a hampering effect, that it slows down the economic recovery, and not only in developed countries but also in emerging countries. And that should be a concern for everybody," she said.
The IEA head described a shift in global oil flows toward Asia, driven by lower U.S. oil imports. The U.S. Energy Information Administration said in its latest short-term energy outlook report that by 2014, U.S. oil imports would be the lowest in 25 years.
"We believe the imports will be halved," Ms. van der Hoeven said, adding that this would happen before 2035 and that it would affect global oil flows. "Imports from countries like Saudi Arabia will have to look for new markets, and that will be in Asia."
She confirmed the trend described by the U.S. EIA report that by 2014, oil demand from non-OECD countries would exceed that of developed countries, at 46.43 million barrels a day compared with 45.03 million barrels a day in the OECD.
"Their figures are not exactly the same [as the IEA], but the trends are the same," said Ms. van der Hoeven. "Demand from the OECD is not growing, while demand for energy in general and for oil in Asian countries is growing fast."
She didn't want to state any pain level for the oil price, the threshold below which the world economy was able to continue growing.
"I can't answer your question," she said noting that it wasn't in her remit. "What you know as well as I do is that you have to have a certain level in your price to keep investments going on."
The IEA believes that the world needs to invest $37 trillion to secure its energy supply by 2035, or $1.6 trillion a year. For now, investment is sufficient, Ms. van der Hoeven said.
"We are investing the amount of money that we think is necessary," she said. "But, there's always a but. The question is: will it be there in the future as well?"
The IEA referred to this in the "Deferred Investments" scenario in its World Energy Outlook 2012 report. If the required investments are not made, for instance by Saudi Arabia and the Gulf countries, Ms. van der Hoeven said, "there will be a different situation."
The IEA head acknowledged that many new oil fields in the coming decades will be developed in difficult places like the Arctic, at huge depths, in the permafrost or in pre-salt areas, which means higher investments. She did not want to say what price level those investments would require.
"I know that you would like to hear from me what kind of an oil price would be break-even point, but I am not going to say that," she said.
Copyright (c) 2012 Dow Jones & Company, Inc.
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