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Mideast faces oil challenges from outside and within – BP Russia, S. America strive to replicate US shale boom

LONDON, Jan 15, (RTRS): Middle Eastern oil producers face a mountain of challenges in the next two decades as Russia and South America strive to replicate the US shale oil boom, while demand in the region’s domestic markets rises sharply. Oil major BP forecast in its annual energy outlook that energy production in the Middle East will grow by 37 percent by 2015, while its consumption grows by 77 percent. As a result, its oil export capacity will erode to as little as 65 percent of production volumes from the current 72 percent, putting additional pressure on government budgets of countries such as Saudi Arabia that depend on oil export revenue. “The Middle East will surpass the former Soviet Union as the most energy-intensive region in the world ... The region is expected to become the largest consumer of liquids per capita, surpassing North America,” BP said. “By 2035, the region will consume over three times the liquids per person than the global average,” it added.

Meanwhile, the oil company expected Russia and Latin America to join the United States in tapping shale oil over the next two decades. BP forecast the United States will become energy self-sufficient by 2035, a more concrete forecast than previously, as the shale boom allows it to surpass a previous 1970 peak in oil output and as gas supply rises. “The second-biggest coming in over time is Russia and then South America, and in South America Colombia and Argentina,” BP’s chief economist, Christof Ruhl, said at a news briefing, referring to sources of shale oil growth outside the US. BP’s prediction that countries other than the United States will partly re-create its shale oil boom contrasts with other long-term energy forecasts. The Organization of the Petroleum Exporting Countries, for example, assumes shale production will have no impact outside North America.

World oil demand will rise to 109 million barrels per day (bpd) by 2035, up 19 million bpd and led by China, India and the Middle East. Even so, oil will be the slowest-growing fuel over the period. BP expects Russia and South America to contribute about 1 million bpd of shale oil each by 2035 and that oil from tight rock formations will account for 7 percent of global supplies in 2035, Ruhl told reporters. Still, the entry of other producers will not prevent a slowdown in the rate of supply growth. “What we have is very rapid growth right now, and decelerating over time,” Ruhl said. US oil imports peaked in 2005 at over 12 million bpd and 60 percent of demand, and they will decline to less than 1 million bpd, less than 10 percent of US demand, during the forecast period, he said. This is the fourth year that BP, a publisher of benchmark energy statistics for over 60 years, has issued its long-term energy outlook. This year’s report looks to 2035, five years longer than previously. This survey was the first time that BP predicted exactly when the United States would be energy self-sufficient. Last year’s report said it would “nearly” happen by 2030.

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