The World Energy Investment Outlook is out. Sherine Nasr reviews its findings The World Energy Investment Outlook (WEIO), a publication by the International Energy Agency (IEA) of the Organisation for Economic Cooperation and Development (OECD), predicts that energy demands will increase by more than two-thirds over the next 30 years. "Primary demand for natural gas will grow fastest, at 2.4 per cent per year, followed by oil, at an annual rate of 1.6 per cent, and coal at 1.4 per cent. The demand for gas and coal will be driven by rising electricity requirements, which are estimated to grow at 2.4 per cent per year." The report added that by 2010 the number of countries importing energy resources will have grown while those exporting energy resources will have declined. "Global energy resources are sufficient to meet the upsurge in demand," says the report. "However, significant investment will be required in both the production and delivery of energy to convert the resources available into supplies." This first-ever effort to quantify future global energy investment needs has thrown up some daunting figures. Global investment in the energy- supply infrastructure for the period 2001-2030 is estimated at $16.5 trillion, or one per cent of average annual global GDP. Of this total almost 60 per cent will go towards generation, transmission and distribution in the electricity sector. The extent to which countries will be able to mobilise the necessary financing will depend on the competitivity of domestic energy sectors. Production and demand will increase most rapidly in developing countries, including Egypt, which will need 49 per cent, or $7.9 trillion, of total global investments in the energy sector over the next three decades. Middle Eastern investment requirements are estimated at one trillion dollars, of which half will have go to the oil sector and a quarter to gas. Developing countries and countries in transition, the report says, "face the greatest challenges in mobilising the required finance. Poorly developed financial markets offer limited opportunities for governments to borrow from domestic private lenders. Fostering an investment climate that can be conducive to attracting the capital required will remain a priority," the report indicates. As the site of almost 70 per cent of the world's proven oil reserves it will fall on the Middle East to meet almost two-thirds of the projected increase in global oil demand. "The capacity to mobilise investment for expanding oil production capacity among Middle East oil producers, most of which are OPEC (Organisation for Petroleum Exporting Countries) member countries, will be vital to global energy-market prospects." The report underlines that with the upsurge in global energy demand, calls upon OPEC member countries to secure supplies will increase. "OPEC member countries have safeguarded a constant stream of oil supplies for more than 40 years and with it the stability of the world economy. Nevertheless, they will remain subject to heavy pressures, not only because of the volatility of oil prices and revenues but also because they have to plan for the day these natural resources are depleted," concluded the report.
