The world needs to invest a total of $10 trillion between now and 2035to meet future demand, $2 trillion more than projected a year ago, theInternational Energy Agency's chief economist, Fatih Birol, said Tuesday.
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Birol said this year's World Energy Outlook, which will be released inNovember, sees a need for total energy investment of $38 trillion over theperiod to 2035, around half of which is needed for oil and gas and half forelectricity.
This means an annual investment requirement of around $1.5 trillion overthe period, Birol told a news conference in Paris on the sidelines of theIEA's annual ministerial meeting.
"Oil and gas are the key areas for investment," Birol said.
The agency is forecasting an investment requirement of $9.5 trillion fornatural gas, $16.9 trillion for power, $1.1 trillion for coal and $0.3trillion for biofuels.
Key to meeting future demand will be investment in the Middle East andNorth Africa, "because about 90% of [production] growth in the next 10 yearsneeds to come from MENA," Birol said.
"And if it doesn't come through it will have major implications for oilprices," he said.
"We shouldn't forget that in many producing countries production isdeclining," Birol said, stressing the need to compensate for these declines.
But Birol also said there were "some signs of reluctance" to carry outthe necessary investment, which could mean "much higher prices than we seetoday."
He declined, however, to say how high prices might rise if there was notenough investment to meet future needs.
Birol said he would be surprised if Libya managed to restore its oilproduction to levels seen before the uprising against Moammar Qadhafi before2013.
"We are still looking at Libya," he said. But, he added, "I would bepositively surprised if we see pre-war levels reached before 2013."
Top Libyan officials have said in recent weeks that they expected torestore crude production to pre-uprising levels of around 1.6 million b/dwithin 15 months.
The IEA said in its latest monthly oil market report on October 12 thatit now expected Libyan production to recover to around 600,000 b/d by the endof this year, having upwardly revised its previous projection of between350,000 b/d and 400,000 b/d by end-2011.
"So far, production is made up of relatively easy barrels from fieldsunaffected by the fighting but thereafter restoring production may be moredifficult as companies implement repairs to war-damaged fields, terminals andother key infrastructure," the IEA said at the time.
--Margaret McQuaile, firstname.lastname@example.org
--Kate Dourian, kate_Dourian@platts.com