OPEC report confirms oil supply will match demand

By George Jahn

VIENNA, Austria – World energy needs will spike by more than 50 percent by 2030 but adequate oil reserves, conservation and new methods of recovery mean supply will keep pace with demand, the Organization of Petroleum Exporting Countries said Thursday.

In its “World Look Outlook for 2008,” OPEC also took issue with critics blaming present skyrocketing prices on the refusal of the organization to increase output, asserting that the weak U.S. dollar and market speculators were at least partly to blame.

And it suggested that decades of low prices led to under-investment, leaving the industry ill-prepared to sate the increased hunger for crude generated by strong economic growth.

Past “low prices were bad for the oil industry, and in the longer term they were also bad for consumer,” said the summary of the 214-page report. At the same time, despite delivery bottlenecks, “there is enough oil to meet the world’s needs for the foreseeable future,” it added.

OPEC Secretary-General Abdalla Salem El-Badri made the same point, in his foreword.

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“Today, what is apparent is that oil supply and demand fundamentals are healthy,” he wrote. “There is, and has been, more than enough supply to meet demand, and oil stocks in major consuming countries are at comfortable levels.

The report projected oil demand to rise by 29 million barrels a day from 2006 through 2030 to reach a daily 113 million barrels a day – a drop of 4 million barrels a day over its predictions last year, “due in part to the higher oil price assumption” – expectations that pricey petroleum is here to stay.

A large part of that projected demand will be met by new recovery and production procedures, meaning total demand for “conventional crude” – oil pumped from wells and other methods using present day technology – will not exceed 82 million barrels a day by 2030, said OPEC.

In comparison OPEC last month said it expects oil consumption this year to amount to an average of 86.9 million barrels per day.

“Oil has been in the leading position in supplying the world’s growing energy needs for the past four decades, and there is a clear expectation that this will continue,” said the report, estimating that crude and other fossil fuels will make up 85 percent of the world’s energy mix in 2030. “Gas is expected to grow at fast rates, while coal retains its importance in the energy mix.”

The generally optimistic tone of the report contrasted sharply with forecasts published last week by the International Energy Agency.

That report by the energy watchdog of the world’s top industrialized nations predicted that oil supplies will remain tight at least for the next five years, despite record prices that have reduced demand. And IEA Executive Director Nobuo Tanaka said the world was in the grip of an “oil shock,” similar to once in the 1970s and then the 1980s.

In its monthly forecast Thursday, the IEA slightly raised its forecast for global oil demand this year and said growth would continue in 2009.

The report came as the benchmark contract for crude was trading at above $136 a barrel but about 6.4 percent below last week’s record high.