The International Energy Agency has warned that as low oil prices lead to production cuts and decreasing investment, the world could be heading toward a real supply shortage, RTE Ireland reported.
The Organization of Petroleum Exporting Countries has cut its supply by about 1.5 million barrels per day, and there are signals that more cuts may be on the way. In addition, on the precipice of a global recession, companies are being more cautious when it comes to investing in new development.
In its most recent report, the Paris-based IEA estimated the world needs more than $26 trillion in investment in the next 20 years to ensure adequate energy supplies, an increase of more than $4 trillion over the IEA's 2007 estimates. As the current oil wells become depleted, more will need to be ready in order to meet demand.
An estimated 30 million barrels of oil per day are expected to be needed by 2015, the IEA predicted, because though demand is slowing now, it will continue to grow steadily over the next 20 years.
World energy demand is expected to grow by 1.6 percent per year on average, with China, the world's second-largest energy consumer, together with India, accounting for just over half the increase.
China National Petroleum Corp., Iraq's North Oil sign deal
China National Petroleum Corp., the parent company of China's largest oil and gas producer PetroChina, announced it has signed a $2.9 billion, 20-year oil service deal with Iraqi state-owned oil company North Oil.
Together, CNPC and North Oil will help develop the al-Ahdab oil field in eastern Iraq's Wasit province, China Knowledge reported.
The deal was signed by both Iraqi Oil Minister Hussein al-Shahristani and CNPC President Jiang Jiemin at a signing ceremony in Baghdad.
It is the goal of North Oil to get the al-Ahdab oil field up to its production capacity of 110,000 barrels per day. The majority of the oil will be supplied to the Zubaiduyah power plant, and the surplus will be exported.
In June 1996 CNPC signed its first oil deal with Iraq's government under Saddam Hussein; however, it was postponed indefinitely after the United Nations imposed economic sanctions.
The current contract is reportedly almost identical to the one signed in 1996.
Putin wants some control over oil prices
Russian Prime Minister Vladimir Putin said the country must develop a set of measures to influence world oil prices, RIA Novosti reported.
Global oil prices have fallen more than 50 percent since July, when they hit record highs. Now oil is sitting at a nearly 20-month low.
"As a major exporter and producer of crude and oil products, Russia cannot remain on the sidelines with regard to the formulation of world pricing for crude, and we must develop an entire range of measures that would allow us to actively influence the market situation," Putin said.
Putin reportedly is meeting with the heads of Russia's top oil companies to discuss crude export duty cuts and other options for dealing with the economic crisis. Among the companies Putin is meeting with are state-run Rosneft, Gazprom Neft, LUKoil, TNK-BP, Surgutneftegaz and Transneft.
Closing oil prices, Nov. 12, 3 p.m., London
Brent Crude oil: $56.74
West Texas Intermediate crude oil: $60.59