No global shortage of oil despite high prices: IEA economist

Paris (Platts)--28Jun2005

World oil markets are not suffering from any physical shortage of crude
supplies despite record high oil prices, Fatih Birol, chief economist at the
International Energy Agency, said Tuesday. Asked if the IEA intended to
release its strategic stock reserves as oil prices hovered around $61/bbl,
Birol said; "We have no intention whatsoever. The strategic stock reserves are
designed for a physical shortage of oil, at the moment there is no physical
shortage of oil." Birol was speaking at a joint seminar between the
Organization of Arab Petroleum Exporting Countries and the French Petroleum
Institute (IFP) in Paris. Asked whether OPEC could release more oil onto the
market, he said: "Of course they can do more, as oil demand increases, they
have huge reserves. But we appreciate what they have been doing, we expect
them to continue."

Birol said huge investments were needed in the upstream and downstream
sectors, repeating earlier estimates of some $3-trillion needed by 2030 to
meet oil demand growth. He also reiterated IEA estimates of demand growth
reaching 120-mil b/d in 2030. Birol said Middle East producers should open up
more to foreign capital to fund investment needs, and allow greater
competition with state oil companies to develop key projects. The IEA, the
energy watchdog for industrialized nations, works closely with the
international oil industry on contingency planning and has developed more
flexible response measures since the 1970s after markets became more
liberalized. It has several triggers for the release of oil, one being when
there is a 7% shortage, equivalent to 6-mil b/d, as measured in imports.

This story was originally published in Platts Global Alert 
http://globalalert.platts.com

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