WORLDENERGYOUTLOOK2007:FACTSHEET OIL

ISTHEREENOUGHOILTOGOAROUND?WHATARETHE
IMPLICATIONSOF RISINGOILDEMANDINCHINAANDINDIAFOR
GLOBALENERGYMARKETS?
The worlds remaining oil resources are expected to be sufficient to meet
risingdemandoverthenexttwoandahalfdecades.Muchoftheincreasein
demandwill come from Chinaand India, driven largelyby the rapidgrowth
indemandformobility.Asmuchoftheirincrementaloilneedswillhavetobe
imported,therelianceonasmallnumberofmajoroilexporters notablyin
theMiddleEastissettogrow,raisingconcernsaboutenergysecurity.
Globaloildemand isprojectedto reach116millionbarrelsperday
in 2030 in the Reference Scenario 32 mb/d up on 2006. Fast
growingenergydemandfortransportisthemaindriver.Today,thereare
about 900 million cars and trucks on the worlds roads by 2030, the
number is expected to pass 2.1billion. Some 42% of the increase in
globaloildemandby2030comesfromChinaandIndia.Chinaaccounts
forthebiggestincreaseinoildemandinabsolutetermsofanycountryor
region.
World oil resources are estimated to be sufficient to meet the
projected growth in demand to 2030, but output becomes more
concentratedinOPECcountries providedthenecessaryinvestment
isforthcoming.OPECsshareofworldoilsupplyjumpsfrom42%now
to 52% by 2030. Although new oilproduction capacity additions are
expectedtoincreaseoverthenextfiveyears,itisveryuncertainwhether
theywillbesufficienttocompensateforthedeclineinoutputatexisting
fields andkeeppacewiththeprojectedincreaseindemand.Asupplyside
crunchintheperiodto2015,involvinganabruptescalationinoilprices,
cannotberuledout.
Tomaintaingrowthinproductioncapacity,theoilindustryneedsto
invest a total of $5.4 trillion over the period 20062030, mostly for
upstream developmentsandmainly to replace capacity that will become
obsolete over the projection period. Underinvestment in the exporting
countriescoulddriveuppricesinthelongerterm.
Chinas and Indias combined oil consumption increases from
9.3mb/d in 2005 to 23.1 mb/d in 2030. Almost twothirds of this
increase come from the transport sector. The total number of lightduty
vehiclesontheroadisprojectedtojumpfromabout22millionin2005to

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more than 200 million in 2030 in China, and from 11 million to 115
million in India. As a result of rising demand and limited indigenous
resources, both countries need to import more oil. Chinas and Indias
combinedoilimportssurge,from5.4mb/din2006to19.1mb/din2030
this is more than todays imports of Japan and the United States
together.Importsinallotherconsumingregionsalsorise.
Much of the additional oil imports required by China, India and
othercountrieswillcomefromtheMiddleEast,thesceneofmostpast
supply disruptions, and will transit vulnerable maritime routes to both
eastern and western markets. Supply disruptions drive up prices to all
consumingcountries, regardless of where they obtain their oil.Ensuring
reliableandaffordablesupplywillbeaformidablechallenge.

Theassumedoilpricesunderlyingtheseprojectionsareslightly
higherthaninWEO2006, mainlybecauseofthecontinuingtightnessof
crudeoilandproductmarketsandsupplysideconstraints(including
growingbarrierstoupstreaminvestmentinseveralresourcerich
countriesandrefinerybottlenecks).InthisOutlook,theIEAcrudeoil
importpriceaproxyforinternationaloil pricesisassumedtobe
around$60inyear2006dollarsin2015andtoriseslightlyto$62by
2030(or$108innominalterms).Pricesofthemajorbenchmarkcrude
oils,WestTexasIntermediate(WTI)andBrent,willcorrespondinglybe
higher.In2006,WTIwasup$4.40perbarrelcomparedtotheaverage
IEAcrudeoilimportprice,andBrentwasup$4.53.Futurepricetrends
hingeontheinvestmentandproductionpoliciesofasmallnumberof
countries mainlyMiddleEasternmembersofOPEC thatholdthe bulk
oftheworldsremainingoilreserves,aswellasondemandprospects.

Oildemandreaches120mb/din2030intheHighGrowthScenario
3.6mb/dmorethanintheReferenceScenario.Thisscenarioassumes
higherratesofGDPgrowthinChinaandIndia.Thesehigherratesresult
in faster growth in energy demand in both countries. But it also boosts
international trade between each ofthe twocountries and the rest ofthe
world. Higher growth in energy demand, in turn, coupled with supply
constraints,drivesupinternationalenergyprices.

Copyright 2007 OECD/IEA