The International Energy Agency (IEA) has indicated that the world needs 40 million barrels of oil per day production capacity between 2013 and 2035 to make up for the current decline in global crude oil production.
Already, the government of United Kingdom (UK), has announced an investment of £13.5 billion oil and gas investment for 2013 to stem the decline in production in recent years and reduce crude oil importation.
IEA Senior Energy Analyst, Capella Festa, at the ongoing Society of Petroleum Engineer (SPE) Offshore Europe in Aberdeen, Scotland, believed that there is need for oil producing countries to increase their production capacity to meet oil demand of the future.
Nigeria’s crude oil production has fallen by 10 per cent in the last few years, resulting to a decline of over 10 per cent.
Indeed, the Organisation of Petroleum Exporting Countries (OPEC) has put the country’s crude oil production at 1.8 million barrels per day (bpd) in May, a decline from 1.9 bpd recorded in the previous month.
Festa lamented the effect of the exploitation of conventional oil by the United States of America in the global energy mix.
She expected the US to reduce crude oil export to three per cent by 2035 due to the utilisation of conventional oil resources. The IEA has projected that global energy demand would rise by over one third from 2013 to 2035, underpinned by rising living standard.
“There are now signs of increasing policy focus on energy efficiency with retreat from nuclear in some countries.The surge in unconventional oil and gas production has implication well beyond the United States. There is going to be reduction in net oil imports in the United States in the new policies scenario. By 2035, almost 90 per cent of Middle Eastern oil exports is expected to go to Asia”,Festa said.
She also disclosed that over $500 billion is being spent every year on subsidy on fossil fuel, adding that energy efficiency was not playing its role.
Meanwhile, UK Chancellor of Exchequer, George Osborne, while speaking at the conference,said that the government has put in place a £3 billion allowance to support investment in exploration of large and deep fields like those West of Shetland.
“And I’ve introduced a £500 million allowance for large shallow-water gas fields and a brownfield allowance to encourage incremental investment in older fields.
Perhaps most important of all, I’ve provided the industry with long-term stability, by providing certainty on tax reliefs – worth upwards of £20 billion over a 30-year period – on future decommissioning costs.
“Funded by the whole of the UK, that’s equivalent to £3000 pounds for every man woman and child in Scotland – being used to support investment in the North Sea.
“The UK government will enter into contracts with industry setting out what relief companies can expect to receive in future when decommissioning assets. And if the actual amount turns out to be less, the government will make up the short-fall” he said.
“And your industry – not the Treasury – estimates that this decommissioning certainty will drive at least £17 billion of increased investment, extending the life of the North Sea basin with an additional 1.7 billion barrels extracted”, he said.
He stressed the UK government’s concerns about the safety of shale fracking, but insisted that the country would suffer competitively if it did not look to develop shale gas and crude oil resources. “Of course we want exploration of our shale resources to be safe, to avoid environmental damage and to be done in a way where communities get the benefit of what’s happening in their backyard. And that is why we got the industry to commit to generous community benefits,” said Osborne, referring to a scheme announced in mid-July to ensure that local communities receive at least $150,000 of benefits from operators for every fracked well site.
“But let me also say this. Britain led the world in finding new sources of energy: coal in the 18th and 19th centuries, oil in the 20th Century and renewables at the turn of the 21st Century. If we turn our back as a country on sources of new energy, which countries like China and the United States are exploiting, then we are we are saying to British families: ‘You pay energy bills that are higher than those paid by families elsewhere.’ We are saying to British companies: ‘You’ll face costs that are higher than those faced elsewhere.’ And we are saying to our country: ‘You’ll have fewer jobs and less investment and a higher cost of living.’ But I am not prepared to say that to the British people.
“Britain is not going to turn its back on the energy sources of the future. So we’ve set out a generous new tax regime for shale gas to remove the bureaucratic obstacles to its use onshore and offshore.”
Information from Guardian was used in this report.