IEA says forecast oil output rise is attainable

 
A projected rise in the world’s oil production by around 5.5 million barrels per day (bpd) in 2015 can be attained due to the recent price increase and ensuing growth in investment, the International Energy Agency (IEA) has said.

Nearly one million bpd of the increase will likely come from conflict-battered Iraq despite a decline in the output of some of the country’s fields, said David Fyfe, Head of the IEA’s Oil Industry and Markets Division.

In an interview with the Paris-based Arab Oil and Gas monthly magazine, Fyfe was asked whether the IEA’s recent forecasts that global oil output would rise from 91 million bpd in 2009 to 96.5 million bpd in 2015 are realistic.

“We have very strict filters concerning the development of oil supply. We focus on projects that are underway and we do not consider ourselves bound by the information provided by operators about the timetable for their implementation, if we think this cannot be adhered to,” he said.

“The levels of supply we project for the year 2015 are thus not aspirational but are all perfectly attainable. Two years ago, and again last year, we were more cautious about supply, since we took account of the fall in oil prices, the reduction in exploration-production outlays that was largely a result of it, and the rise in costs. Since then, prices have recovered, investments have risen and costs have decreased.
Furthermore, the 2009 baseline levels exceeded our expectations. These readjustments are attributable to all those factors.”

Fyfe said Iraq and other Middle East producers, including the UAE, Kuwait and Saudi Arabia, would be the main contributors to the increase as they will boost Opec’s crude supply by nearly 1.9 million bpd to 36.8 million bpd.

But he added the IEA’s projections about Iraq were not fully accurate given the ongoing debate on the country’s oil law and the policies of future governments.

“As regards Iraq, we obviously cannot be 100% sure of our estimates in view of the debate on the oil law, the policies of future governments, security and contractual risks, and the need to invest very large sums in transport and export infrastructure… However, what happened in 2009 with the organisation of two international bid rounds for field developments and redevelopments, and the results of these bid rounds represent very significant progress. We think Iraqi oil production could increase by one million bpd by 2015,” he said.

“That is a net rise which takes account of the fall in the output of existing fields. In light of all the elements we have at our disposal, this figure seems realistic.”

Fyfe said non-Opec supply could swell by only around one million bpd because of existing policies and the BP leakage incident in the Gulf of Mexico.

“As regards these supply projections, we take account of policies that are being pursued. We know they may change, but we work on the basis of measures and policy orientations that are known and being implemented,” he said.

“Furthermore, new measures and policies would not necessarily have a marked impact on the period from now to 2015. Canada is thus making significant efforts in the area of carbon capture and storage (CCS). The accident in the Gulf of Mexico could have a negative impact on the development of Brazil’s deep offshore, but we do not know at the moment what the regulatory authorities will decide to do in the light of the conclusions of the inquiries underway in the US about this disaster and the means to prevent it from occurring again.”

He said IEA’s assumption about Brazil is “quite prudent” since its oil production is expected to increase by 800,000 bpd to 2.9 million bpd between now and 2015.

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