Though excluded from OPEC quotas, Iraq as a founding member of OPEC still plays a major role in the organisation. In Tehran for a conference, Minister Shahristani on April 23 said an OPEC price average of "at least $70/b is "acceptable". He said this level was in the interest of both oil consuming and producing nations and would encourage E&P investment. He said Iraq hoped to see its crude oil output capacity to reach 6m b/d by 2014/15.
The minister said the group's collective crude oil production ceiling should be lowered at OPEC's next ministerial meeting in Vienna on May 28, a line pursued by Algeria, Iran, Venezuela and other price hawks. But Saudi Arabia and its GCC allies are against a change in current output quotas and OPEC's Secretary-General 'Abdullah al-Badri has since discounted the possibility of the Vienna conference lowering production.
On the other hand, that currently low oil and gas prices caused by recession will lead to a major increase in world energy demand is a prospect offset by a more determined switch to low-carbon strategies in the OECD world. True, world oil demand will sooner or later rise again and cause paper WTI to rise even above $200/b. But the next high-price cycle is more likely to be shorter than the one between late 2002 and mid-2008.
The risks of oil demand destruction are expected to be higher during the next cycle, when alternative fuels would compete with conventional oil and energy efficiency will put limits to the growth of world demand for natural gas.
In an analysis out on April 24, the Cambridge Energy Research Associates (CERA) said the EU was to be the first to achieve a sustained reduction in energy demand as policies to curb gas and power use took hold. It said the EU's energy efficiency strategy, even if only partially successful, will cut the group's dependence on imports of Russian gas and ease the need for new energy infrastructure such as power plants and gas pipelines. This will create a challenge for EU energy companies, which will face shrinking domestic markets. Yet, CERA said it was unlikely the EU will meet its target of improving energy efficiency by 20% by 2020.
CERA's Doug Howe said: "Even though we think they can only get halfway, what they can do is astounding, and unprecedented". He said the EU will be able to cut its demand for gas, and stop electricity consumption growing, based only on technology in use today. By 2030, he said, EU gas consumption could be cut back to the levels of the early 1990s. That would represent a cut of 125 BCM/year - equivalent to the combined consumption of Germany, France and Spain.
This weakens the case for new gas import pipelines, such as Russia's Nord Stream and South Stream and the EU-proposed Nabucco line to bring gas from the Caspian region to the EU via Turkey. Howe said: "When the Ukraine-Russia crisis hit [in early 2009], everyone was saying: 'We need to get those pipelines built'. But energy efficiency, if the EU manages to deliver it, could be the single biggest contribution possible for energy security in Europe".
Imagine what will happen in the US, by far the largest energy market in the world, if Washington succeeds in ending American dependence on foreign oil through a ten-year low-carbon strategy. It was drummed up by Barack Hussein Obama before and after his Nov. 4, 2008, election as the first African-American president of the US.
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