BP CHIEF CLAIMS PEAK OIL NOT TO BLAME FOR SOARING PRICES
12 June 2008
Robin Pagnamenta, energy and environment editor
Global oil production fell last year for the first time in six years while consumption continued to grow, according to BP.
The oil company’s annual Statistical Review of World Energy, published yesterday, offered a vivid illustration of the fundamental imbalance between supply and demand that has helped to drive crude prices to record highs of $139 a barrel this month.
It showed that global production had slipped by 0.2 per cent in 2007 to 81.53 million barrels per day, while consumption grew by 1.1 per cent, or one million barrels, to 85.22 million barrels per day.
However, Tony Hayward, the chief executive of BP, dismissed claims that the notion of “peak oil” was responsible for soaring prices. BP said that there were 1.24 trillion barrels of oil left globally, or 41 years of production at present rates.
Mr Hayward said that the imbalance was being driven by “human, not geological” factors: a lack of investment, high taxes and barriers to access. About 80 per cent of the world’s oil is controlled by national governments.
“The reality is that this is about fundamentals and a very tight balance between supply and demand,” Mr Hayward told an audience at BP’s headquarters in London.
“Resource nationalism and taxes are on the rise everywhere.”
Mr Hayward singled out Russia, where production has been particularly weak since last year after several years of strong growth, as an area of particular concern. “(For several years) rising production from Russia has met barrel-for-barrel growing demand from Asia,” he said, adding that this trend had ended, increasing upward pressure on prices globally.
Mr Hayward refused to be drawn on exactly where oil prices might be heading, but he did offer a bleak assessment of the general outlook. “Our view is that, at least in the medium term, the era of cheap energy is over . . . High oil prices are a wake-up call. The world urgently needs more energy investment of all kinds. We need all forms of energy from all sources and we need to focus on energy efficiency.”
Mr Hayward said that hundreds of trillions of dollars would need to be spent to unlock the world’s remaining reserves and other sources of energy necessary to meet demand, which is being led by developing countries, particularly China.
Mr Hayward insisted that world oil production could exceed 100 million barrels per day, dismissing claims by Total, BP’s French rival, which has said that the world would struggle to lift output above 95 million barrels.
BP pointed out that oil prices had been on an upward trend for six years – the longest increase since records began in 1861 – but the company was optimistic that high prices would stimulate fresh investment in production and other forms of energy.
Jeremy Leggett, a former Greenpeace chief scientist who is now chairman of Solar Century, a solar energy company, cast doubt on BP’s statistics on total global reserves. He said that the figures were unreliable because they came from third parties, including Opec, the producers’ cartel.
The report also showed that global demand for coal had surged by 4.5 per cent last year, stoking fresh concerns about its contribution to global warming. Consumption increased to 3,177 million tonnes of oil equivalent in 2007, up from 3,042 million tonnes in 2006, according to BP’s report.
The expansion was driven by brisk demand from China, whose booming economy led to a 7.9 per cent increase in coal consumption, mostly for use in power generation – accounting for two thirds of global growth.
The rapid growth in coal prompted concerns about the fuel’s contribution to the build-up of greenhouse gases.
“These figures are very worrying,” Robin Oakley, head of the climate campaign at Greenpeace, said. “Half of all manmade carbon emissions come from coal, so this really is the single biggest threat to the climate.”
BP said that global emissions of carbon had increased by 2.8 per cent, but in China emissions had grown by 7.5 per cent.
Copyright 2008 News Ltd. All Rights Reserved
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