Opec could pump up to $430 billion (Dh1.58 trillion) into projects in the next 10 years to expand its crude output capacity, but such investments could be stifled by persistent uncertainty in global demand, said an Opec official.

Hasan Qabazard, Director of Opec’s Research Division, said demand for
Opec’s oil could rise by 10 million barrels per day to 41.1 million bpd
in 2030, but the group’s share of global crude supply would remain
unchanged.

“Security of demand is an integral part of energy
security. Oil demand projection figures have been repeatedly revised
down,” he said in a recent presentation at the Riyadh-based
International Energy Forum. “Upstream development investment
requirements for Opec by 2020 lie within $180bn to $430bn range, but
uncertainties in demand pose investment risks for Opec and a waste of
precious resources. They have negative effects upon the organisation’s
future investments in oil expansions.”

Qabazard said the “security
and predictability” of demand are as important as the security of
supply, adding that policy measures in major consuming nations have had
adverse impacts on demand.

He said such measures include the US
Energy Independence and Security Act, renewable fuels standards (Eisa
targets), EU Climate and Energy Legislative Package, binding targets
for CO2 emissions from new cars, Japan’s promotion of measures to cope
with global warming, energy saving measures in all sectors, China’s
energy conservation law, policy measures promoting new transportation
technologies, and electric and hydrogen fuelled cars.

His figures
showed non-Opec crude oil plus NGL supply would steadily climb to a
plateau of 45 million bpd before beginning a gradual decline after 2020.

“Total
non-Opec supply continues to rise (large growth from Canadian oil sands
and biofuels) while there will be a rapid increase in Opec’s NGL.
Demand for Opec crude is expected to rise to around 41 million bpd by
2030,” he said.

“But Opec crude oil share will not be much different
than today. Over the long-term, increase in non-crude will moderate the
need for higher crude supply. The share of Opec crude in total supply
by 2030 remains below 40 per cent.”

Qabazard estimated world oil
demand growth would rise to 1.2 million bpd by 2013 but added growth
would be exposed to risks. He said Opec could invest $110bn to $120bn
in upstream expansions by 2013, adding that this would create a spare
capacity of six million bpd.

“Demand for energy will grow, albeit at
a lower pace. Fossil fuels will satisfy more than 80 per cent of global
energy needs over the projection period. Oil remains the leading source
of energy while growth in natural gas will remain fast. Low base for
renewable energy will continue to grow fast, but this will have limited
impact on the energy mix,” he said.

Qabazard said the conventional
liquids’ resource base is sufficient to meet future global demand as
there has been a sharp increase in resource base levels due to improved
technology and enhanced recovery. “Technology blurs the distinction
between conventional and non-conventional oil,” he said.

He said
price escalation and high volatility was inconsistent with market
fundamentals and that “financialisation” of oil and commodity markets
led to significant speculation in oil last year.

Source: Emirates Business

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