Paris (AFP) – New oil and gas projects may be necessary to maintain current production levels, the IEA said Tuesday, as it is in a public feud with the Trump administration over its forecasts for lower demand. The International Energy Agency said in a report that its analysis of 15,000 oil and gas fields showed that output was declining more rapidly than in the past, which has “implications for markets and energy security”.
The Paris-based agency produces annual reports about energy trends and has forecasted that oil demand will peak by the end of the decade, which would have considerable implications for investment in further oil production. The forecast, along with its 2021 declaration that a halt in investment in new projects was necessary to meet carbon neutrality, drew the ire of the oil and gas industry. The agency has also faced criticism over the past months from the administration of US president Donald Trump, with Energy Secretary Chris Wright threatening in July to pull out of the IEA if it did not reform how it operates.
While the IEA did not address its demand forecast, it said that faster rates of production decline in fields, related in part to development in less productive offshore fields and fracking, meant that investment needs must be reconsidered. “Careful attention needs to be paid to the potential consequences for market balances, energy security and emissions,” IEA chief Fatih Birol said in a statement.
The IEA concluded that “keeping global oil and gas production constant over time would require the development of new resources”. Even taking into account projects approved and under development, the IEA said there was “a large gap that would need to be filled by new conventional oil and gas projects to maintain production at current levels, although the amounts needed could be reduced if oil and gas demand were to come down”. It said upstream oil and gas investment in 2025 was likely to come in at around $570 billion, which implies a small increase in production if it continues at that level.
The OPEC oil cartel, which has publicly clashed with the IEA about the need for further investments in the sector, noted that the report constitutes a U-turn for the IEA. Meanwhile, it said “OPEC has consistently advocated for timely investments in the oil industry to account for decline rates and meet growing demand.”
© 2024 AFP
