Asian demand to intensify crude hunt: IEA

International Energy Agency (IEA) has warned that oil demand would go up from the 2005-level of 84 million barrels per day (mbd) to 99 mbd by 2015 and 116 mbd by 2030 if the world continues on its "current unsustainable path" of energy consumption.

In its just-released World Energy Outlook 2006, it says that over 70% of the increased oil demand is attributable to developing countries.

This demand growth, however, is likely to exert pressure on pricing only in the next decade. "We assume the average IEA crude oil import price to fall back to $47 per barrel in real terms in the early part of the next decade and then rise steadily through $55 (in real-2005 dollars) by 2030."

Prices of other commodities in the energy basket like natural gas are expected to follow the trend in oil prices while the price of coal, demand for which is being fuelled by India and China, is "assumed to change proportionately less over time, but follow the direction of oil and gas prices."

Overall, global primary energy demand is expected to increase by 53% from now to 2030 to over 17 trillion tonne of oil equivalent with over 70% of this increase coming from developing countries led by China and India.

Meeting these demand projections would require a cumulative investment of $20 trillion over 2005-2030. This estimate is about $3 trillion higher than what was projected last year because of the sharp increase in capital costs, it says, adding that China alone needs to invest about $3.7 trillion or 18% of the world total.

Will this investment be forthcoming? "The ability and willingness of major oil and gas producers to step up investment to meet rising global demand are particularly uncertain," says the report.

Nuclear energy should be encouraged

Private sector investments should be encouraged in nuclear energy, which is extremely cost-competitive, and could play a major role in reducing carbon dioxide emissions, says the Energy Outlook.

"New nuclear power plants could produce electricity at a cost of less than five US cents per kWh if construction and operating risks are appropriately managed by plant vendors and power companies."

It adds that "the breakeven costs of nuclear power would be lower if a financial penalty on carbon dioxide emissions were introduced."