WESTERN INDUSTRIALIZED COUNTRIES could import as much as 70% of their oil in the next ten to 15 years, according to the International Energy Agency (IEA), the West's monitoring body based in Paris. That is more than double the present rate. The IEA projects energy consumption in the OECD countries increasing to more than 45m b/d by the year 2005 from the 1990 level of 38m b/d. It calculates that this would require importing 9m b/d more for a total of 31.4m b/d.
Good news for Opec, which will account for 50% of OECD oil imports. And good news, especially, for the Gulf (and Venezuela) which will be the Opec producers best placed to meet the growth in demand. Just as encouraging is the IEA's price forecast. By 2005, it believes, the average price of a barrel of oil will rise to $30 in 1993 prices, more than a third higher than today. But even if crude prices remain flat in real terms, the West would simply become more dependent on oil imports as its own relatively high-cost oil output is marginalised.
As The Middle East suggested in its last issue, however, the optimistic outlook for Gulf oil should be qualified by the growing popularity of gas. While overall consumption of oil is expected to increase, the IEA predicts oil's share of total world energy requirements will continue to decline from 39% at present to 37%. Gas, on the other hand, is seen improving its market share by 3% to 24%.
Encouraging prospects for gas are reinforced by recent studies of regional demand. Wood MacKenzie, the Edinburgh-based energy analyst, foresees the gas market in Europe enjoying a period of sustained growth over the next 20 years. While demand is expected to increase by an annual average of 3.1% for the present decade, a critical supply gap is looming which requires large new volumes of gas to be imported. Wood MacKenzie anticipates existing supplies falling short of demand by 96bn cubic metres in 2000 and 360bn cubic metres in 2010. "Although we consider that significant, additional indigenous production above currently contracted levels is possible from the North Sea," says the analysis, "the remaining gap in supply during the late 1990s is a major concern."
In North America, meanwhile, there will be a "real boom" in gas production, according to Petroleum Analysis, a New York consultancy. Throughout most of the 1980s, the gas industry in the United States was plagued by overcapacity. Supply and demand are now moving back into balance as clean-burning gas...