World Energy Outlook 2008

Just when we're getting used to falling oil prices, the Financial Times says the International Energy Agency (IEA) gives a decidedly pessimistic view in a preview of its World Energy Outlook 2008.

Output from the world's oilfields is declining faster than previously thought, the first authoritative public study of the biggest fields shows.

Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent, the International Energy Agency says in its annual report, the World Energy Outlook, a draft of which has been obtained by the Financial Times.

The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and meet long-term de-mand. The effort will become even more acute as prices fall and investment decisions are delayed.

The IEA, the oil watchdog, forecasts that China, India and other developing countries' demand will require investments of $360bn (£230bn) each year until 2030. The agency says even with investment, the annual rate of output decline is 6.4 per cent.

The decline will not necessarily be felt in the next few years because demand is slowing down, but with the expected slowdown in investment the eventual effect will be magnified, oil executives say.

However, the IEA came out with a statement rebutting the early report:

The WEO is due to be published next month. The IEA said the FT article "appeared to be based on an early version of a draft from several months ago that was subsequently revised and updated."

It added: "The numbers in the article can be misleading and should not be quoted or considered to be official IEA results," the IEA said.

I guess we will have to wait for the full final report to make our own conclusions. The World Energy Outlook 2008 is due out on November 12, but the Table of Contents can be currently found here.