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)