Oil shortages possible after 2000: Subroto
Oil shortages possible after 2000: Subroto
JAKARTA (JP): Oil expert Subroto warned yesterday that the world's oil demand could exceed the supply by the turn of the century.
Speaking before the Indonesia-Canada Business Council gathering yesterday, Subroto predicted that the world's oil demand would probably increase to 72 million barrel per day (bpd) by the year 2000, from the current level of 66 million bpd.
"The demand will likely increase further to 80 million bpd by 2010," Subroto, a former secretary general and president of the Organization of Petroleum Exporting Countries (OPEC), said.
Currently, Subroto said, non-OPEC countries supply 40 million bpd of the world's oil market, while OPEC countries provide 25 million bpd.
OPEC groups Algeria, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
Subroto forecasted that oil production from non-OPEC countries is projected to remain at 40 million bpd, or even to decrease by 2010.
Oil production from the United States and Russia -- two of the largest producers outside OPEC -- has been decreasing substantially. The increase of production from non-OPEC countries is expected from countries such as Columbia, Argentina, Brazil, Yemen, Syria and Vietnam.
Looking at the estimated oil demand of 72 million bpd by the year 2000, and the capability of non-OPEC countries to produce 40 million bpd, OPEC has to provide at least 32 million bpd by the year 2000.
"The question is whether OPEC members could provide the additional seven million bpd by the year 2000 and 15 million bpd by 2010," Subroto said. "If not, there could be serious shortages of oil on the world market."
He said the world's current oil reserves stand at about one trillion barrels, of which OPEC countries control 770 million barrels.
No guarantee
Although OPEC countries hold a large amount of the world's oil reserves, Subroto said, it does not guarantee that they could pump out enough oil to meet the world demand by the turn of the century, because of time, capital and technological constraints.
"If OPEC wants to meet the increasing oil demand for the year 2000, the decision to increase production by seven million bpd must be made now, because it needs at least four years from exploration, to production of oil," Subroto said.
He noted that it also needs about US$80 billion in investment to increase production by seven million bpd. "Could OPEC countries afford it? If not, they would have to attract overseas capital for their oil industry development and it needs special incentives," he added.
He estimated that oil prices will remain below US$20 per barrel until 2000, and by then oil prices will likely soar due to the imbalance between supply and demand.
He said the highest growth of oil demand in the world will shift from industrialized countries in the West to the emerging economies in East and South East Asia, which have booked impressive economic growth.
"By 1997, the oil demand in East and Southeast Asian countries will surpass the combined demand of North American and European countries," Subroto said.
Sluggish economic growth and increasing environmental issues have been behind the lower demand of oil among industrialized countries.
While demand is increasing among East and Southeast Asian countries, oil production in the region tends to decrease, Subroto said.
While China is recorded as a net oil importing country this year, Indonesia is predicted to follow suit after the year 2000, because a number of other oil producing countries in the region, including as Malaysia and Brunei, will not be able to increase their production.
"If we cannot fill the gap between supply and demand, oil prices will be rising. And if that happens, many countries will be in a loss position," Subroto said. (rid)