IEA Sees Oil-Supply Crunch by 2013 on Slow Investment

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". . .oil and natural gas will remain the main energy sources in the next few decades."

The International Energy Agency said the world may face a crude oil shortage by 2013 because of slower investments in oil exploration and production by OPEC members and other producing countries.

"I can't rule out the possibility of an oil supply constraint in 2013 and 2014," Nobuo Tanaka, Paris-based IEA's executive director, said in an interview in Tokyo today. "Investments have dropped, and if this continues, an oil crunch would emerge."

Members of the Organization of Petroleum Exporting Countries have delayed a total of 35 drilling projects, the Wall Street Journal reported on Feb. 10, citing the group's Secretary General Abdalla Salem el-Badri. Saudi Arabia and Kuwait have called off and deferred ventures to find new fields, expand existing wells and build refineries, according to Japan's trade ministry.

"Robust demand for oil, food and metals will return after the world's economy starts picking up in the next few years, led by China and India," Ken Hasegawa, a commodity derivative sales manager at Newedge in Tokyo said before today's interview. "Even as countries accelerate a shift away from oil to alternative fuels, oil and natural gas will remain the main energy sources in the next few decades."

Finance chiefs from the Group of Seven yesterday predicted a "weak" economic recovery will start to take hold in coming months as evidence mounts that the worst of the recession is over. Two months ago the G-7 forecast the "severe downturn" would persist through most of this year.

Tanaka said today OPEC's spare oil-production capacity will fall below 3.5 million barrels a day in 2013. In February, he had projected the group's excess capability at that level. Details of the agency's supply forecast will be published in its medium-term energy report in June, he said.

Tanaka is in Tokyo to attend a meeting tomorrow of trade and energy ministers from OPEC and 13 Asian countries including Japan, South Korea and China to find ways to revive spending and ensure energy supplies after the global recession ends.

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