Unrequited demand : the Middle East and the Caspian in the global energy context

Many countries in the world would like to diversify their oil supply sources and rely less on Middle Eastern oil. For that reason, there will be considerable focus on the ability of the Caspian states and Russia to increase their output. It will be crucial for the Middle Eastern countries, the Caspian states and Russia to promote energy development in a commercial manner and not in political rivalry. If not, other non-OPEC producers such as the Gulf of Mexico, various Atlantic producers, offshore West Africa, the Brazilian offshore basins, and the United Kingdom's West of Shetland reservoir will gain the market. The biggest gainers, however, would be the core OPEC producers of the Middle East and Venezuela who would profit from high prices resulting from their own minimal efforts to increase capacity. The International Energy Agency (IEA) forecasts an increase in total primary energy supply of 2.0 per cent over the next 20 years. The U.S. Energy Information Administration (EIA) forecasts an increase of 2.1 per cent, while ExxonMobil's outlook is for an increase of 1.9 per cent. The IEA believes demand will rise to about 115 mb/d in 2020 and the EIA believes it will reach 117 mb/d. The two agencies do not agree where this oil will come from. The IEA believes that non-OPEC supplies will grow much less than the EIA anticipates. This paper also described production politics and financial constraints in the Gulf states with particular reference to capacity increase attitudes in the core OPEC states of Iran, Iraq, Kuwait, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The opportunities and constraints for the Caspian (Azerbaijan, Kazakhstan and Turkmenistan) to become a major force in world energy production were described with reference to the impact that oil price volatility has already had on predictions of Caspian availability. The IEA expects that the Caspian will be able to produce 75 mt a year for export by 2010. An overview of the different regions was presented and the main oil projects were listed. 6 refs., 7 tabs