Opec sees future fall in demand for its oil
By Carola Hoyos in London
Published: July 11 2008 03:00 | Last updated: July 11 2008 03:00
The Opec oil cartel yesterday warned it might need to slow investment in its oilfields as consuming countries reduce their oil demand through conservation and by increasingly turning to alternatives, such as biofuels.
Abdalla Salem El-Badri, the group’s secretary-general, said: “Why should we invest in spare capacity that will not be used? We see plenty of spare capacity until 2020.”
Opec said new projects from outside the group could reduce the need for the -cartel’s oil to 31m b/d by 2012.
In its most recent annual report, the group also cut its demand forecasts for 2030, estimating that the world would need 113m b/d, 4m fewer barrels than it had previously predicted.
The report cites the efficiency gains and demand erosion that come with high prices as their reason.
Opec doubled its price assumption to $70-$90 a barrel in its latest report.
Some of the biggest recent changes in demand have come in the US where petrol has remained at more than $4 a gallon for a month, according to a survey by the American Automobile Association.
In July, petrol use in the US fell to its lowest level since 2003, dropping 3.3 per cent from levels at the same time last year, the Energy Information Administration, the statistical arm of the US department of energy, said this week.
But in other parts of the world, particularly Asia and the Middle East, analysts still expect rapid growth. Many say Opec is being too optimistic about the ability of countries outside its club to add new barrels.
Some, such as Matthew Simmons, a Texas-based energy investment banker, have even speculated that Opec, and particularly Saudi Arabia, its biggest member, are hiding behind lower demand forecasts to obscure the fact that they will be unable to squeeze as much oil out of their ageing fields as they have claimed.
Copyright The Financial Times Limited 2008
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