Paris (Platts)--11Mar2009

The global recession has shelved spending on some 2 million b/d of
planned oil production capacity worldwide and almost as much refining capacity
creating a potential supply crunch when demand recovers, an analyst at the
International Energy Agency said Wednesday.

Speaking to a refining conference in Paris, IEA senior energy analyst
Amos Bromhead said over $110 billion planned investment has been canceled or
delayed in recent months, the majority of which is in Canadian oil sands
projects.

"We are a little concerned over what this means for the demand/supply
balance...The crisis is driving down demand, price and investment for now, but
an unexpectedly rapid economic recovery could squeeze supply capacity in the
medium term," Bromhead said.

He said the IEA sees a large increase in spare crude production capacity
this year, which could be eroded if the global economy recovers quickly.

Also at the conference, Total's head of strategy Jean Jacques Mosconi
said Total has reduced its outlook for global oil production of 100 million
b/d in 2020 by 4-5 million b/d, due to the global recession.

Also singling out massive cutbacks on Canadian oil sand projects, Mosconi
said many other regions will suffer from spending delays. By example, he said
half of the production from the UK's North Sea is now in the hands of small
and medium-size companies whose investment spending is much more vulnerable to
oil price fluctuations than the oil majors.

"By 2015 this production won't be there when six to eight months ago we
were expecting it to be there,...once demand recovers they will be a new
tension in the market," Mosconi said.

Both speakers said the inevitable conclusion to the current spending cuts
by private-sector oil companies is a greater than expected reliance on OPEC
oil production and non-OECD producers, raising renewed concerns over energy
security and climate change.

Indeed, Bromhead said the IEA sees 97% of the projected increased in
emissions between now and 2030 will come from non-OECD countries, three
quarters of them from China, India and the Middle East.

--Robert Perkins, robert_perkins@platts.com