IEA warns of falling energy investment
London, May 20, 2009
The economic downturn is cutting investment in energy supply, risking higher prices in future that would hamper any recovery, the chief economist of the International Energy Agency (IEA) said on Wednesday.
Fatih Birol told Reuters in an interview the agency, which advises 28 industrialised countries, expects oil and gas upstream investment to fall 21 per cent in 2009 versus 2008 due to the recession.
'Energy investment is plunging,' Birol said. 'If these two come together - a further cut down in the investment and a quick and strong recovery in the economy - we may have difficulties in the oil market in a few years' time.'
'This may mean higher prices, and this will mean the global economy, which will be on the way to recovery, might be badly, negatively affected.'
The outlook may add to concern that oil prices could surge to last year's record high as the economy recovers - although the IEA has often warned that supply investment is too low and a supply crunch may be looming around 2012.
A total of 6.2 million barrels per day (bpd) of oil supply capacity is expected to be delayed over the next few years, Birol said.
He was citing an IEA report which will be presented to the G8 energy ministers who are meeting in Rome at the weekend.-Reuters