Tokyo (Platts)--14Nov2008

The International Energy Agency's Executive Director Nobuo Tanaka said
Friday that the recent weakening of oil prices reflected the weakening demand
situation.

"There is a growing concern in the market that demand is deteriorating
further," Tanaka told a press conference in Tokyo. "Looking at today's prices,
they seem to reflect the weakened demand situation," he added.

His comments followed the latest IEA report released Thursday which
forecast 2008 demand weakening.

The IEA was forced to cut its demand forecast "very significantly,"
following an apparent slowdown in economic growth particularly among OECD
countries, Tanaka said.

The IEA now expects world oil demand to average 86.19 million b/d in
2008, 330,000 b/d less than previously forecast, implying growth from last
year's demand of just 120,000 b/d.

The demand estimate for 2009 has been cut to 86.54 million b/d, down
670,000 b/d from last month's report, leaving expected year-on-year growth of
350,000 b/d.

Just one month ago the IEA had been forecasting oil demand growth of
440,000 b/d in 2008 and 690,000 b/d in 2009.

SUPPLY CONCERNS AHEAD

Meanwhile, Tanaka expressed his strong concerns that today's global
financial crisis may result in delaying some of major investments for
conventional and non-conventional oil, which will be required to sustain
supply in years ahead.

"While the global economic depression will not last for decades, we are
concerned if we will have sufficient supply ... in few years," Tanaka told
reporters.

Without sufficient investments in overall energy infrastructure now,
Tanaka stressed that the global energy markets would likely face "violent
fluctuations in market prices" when economies activated in few years.

"Recent soaring oil prices came with a lack of sufficient investments
made in the 1990s, following falling oil prices," Tanaka said. "We have
learnt this lesson, and we should not follow the same track."

Tanaka stressed the need for "massive" mid-term investments citing
results of an IEA study of 800 producing fields in its annual World Energy
Outlook released earlier this week, which estimated that, even with
investment, output from fields where production had peaked is declining at a
rate of 6.7% and that this rate is likely to rise to 8.6% in 2030.

"We find the results of the declining rate were a lot larger than
anticipated," he said. "We also find the oil production is declining
particularly in the non-OPEC areas, and this also means that our dependence on
OPEC will be increased."

Just to maintain production at today's 85 million b/d demand level over
the period to 2030 would require new production capacity equal to 45 million
b/d, Tanaka said, "which means four new Saudi Arabias in order to compensate
for the decline in the existing fields."

In the World Energy Outlook, the IEA said that energy investment of more
than $26 trillion, $4 trillion more than it forecast last year, was needed
between now and 2030 to ensure energy to meet global demand.
--Takeo Kumagai, takeo_kumagai@platts.com