_

World oil consumers are poised to tap into emergency oil inventories as soon as early September after the International Energy Agency (IEA) dropped its resistance to a U.S.-led plan, a source and an oil journal said on Friday.

The IEA, whose chief dismissed the need for emergency action as recently as a week ago, is now thought to have agreed to the idea, the industry journal Petroleum Economist reported on Friday, citing unnamed sources.

The agency, which advises industrialized countries on energy policy, was worried that key members including the United States, France and Britain might make act together to draw on stockpiles without coordinating with the rest of the group, undermining its credibility, according to the report, which was largely substantiated by an industry source.

“The U.S. is the main driver, the IEA sees no need for a release. However, if major consumers such as the U.S., UK and France want a release, the IEA is likely to step up and play a role,” said the source, who spoke on condition of anonymity.

“A release could be as early as September.”

News that consumer nations could be moving quickly toward intervening in oil markets again weighed on prices, with benchmark Brent crude falling $1.42 a barrel or 1.2 percent to close at $113.59 a barrel. The impact was muted by oil platform closures as a storm heads toward the U.S. Gulf.

The Petroleum Economist said that the sharp decline in Iran’s oil exports this year would be used as a justification.

A release of as much or more than last year’s 60 million barrel injection could occur as early as September, the monthly journal reported in an article by editor Derek Brower, who also writes for the Economist magazine.

“Whether it’s self-inflicted or not, that’s still a supply disruption,” the article quoted an unnamed an official at a government backing the release as saying. The Petroleum Economist has been a well-regarded energy industry publication for decades, but it is better known for its sophisticated analysis and detailed maps than for breaking news.

WHITE HOUSE ‘DUSTS OFF’ PLANS

Talk of tapping into strategic stockpiles resurfaced last week after Reuters reported that the White House has began “dusting off” old plans for a possible release as it fears that the 30 percent rise in oil prices since June could undermine the effect of sanctions on Iran. Analysts also have said the move could be timed to aid President Barack Obama’s reelection effort.

The Petroleum Economist said the White House had spent “recent weeks” seeking to persuade other countries to join the plan, although officials in both the United States and other IEA members told Reuters that no talks had been held by last week.

Last Thursday, a source familiar with the matter said U.S. officials were waiting to assess market conditions after the Labor Day holiday on September 3 before making a decision.

Plans do not appear to have reached an operational stage.

“I have received no official instruction telling me to stand ready to release stocks and I’m unaware of such plans,” said Jean-Marc Tenneson, head of the steering committee of France’s strategic oil reserves agency (CPSSP).

He said a release would not be “reasonable” under current circumstances, and would only be legitimate if, for example, geopolitical tensions between Iran and Israel worsened noticeably.

FRANCE, UK SUPPORT; SAUDI CONSULTED

The Petroleum Economist, part of the Euromoney group, reported that France and Britain, both of which had signaled their support for releasing reserves during an earlier round of discussions in the spring, have endorsed the strategy.

It cited a diplomatic source as saying a British cabinet official had discussed the move in Washington in recent days.

Last Friday, IEA Executive Director Maria van der Hoeven said there was “no reason for a release,” and that no other IEA member was considering such a measure. She said then that she had not been in contact with the White House over possible intervention.

The Petroleum Economist article said that the IEA had changed its stands after “lengthy talks with U.S. Department of Energy officials in Washington earlier this month”.

The IEA was not immediately available for comment on Friday, but an agency spokesperson had told the journal that the agency “continuously monitors the oil market and remains in close contact with its member countries’ governments so that it stands ready to act swiftly if needed and appropriate”.

Officials in Japan and South Korea — both of which have cut back Iranian imports in order to avoid new U.S. sanctions — also dismissed the need for emergency supplies last week. The Petroleum Economist story said some IEA members were still opposed, including Germany.

U.S. and British officials have consulted on the plan with Saudi Arabia, according to the report. The kingdom believes that there is no need for a release, but that the decision is up to consumer countries, according to the story.

Oil consultancy Petroleum Policy Intelligence (PPI) said this week that some consumer nations had discussed a possible price trigger of $115 to $120 a barrel for taking action, according to the journal’s report.

(Reporting by Jonathan Leff, additional reporting by Michael Rose in Paris; Editing by Marguerita Choy and Leslie Gevirtz)

original article

_

Oil prices are unlikely to fall much further over the balance of this year but could come under pressure in 2013 as the global economy falters due to slower US and Chinese growth, the IEA said Thursday.

The International Energy Agency, which advises developed countries on energy policy, said supply risks appeared to have put a floor under prices for this year even as global economic growth slows.

But for 2013, oil prices could fall in real terms by more than 7.0 percent, based on current models and futures contracts, it said, adding that such a downturn should marginally support demand.

Global economic growth this year will likely come in at 3.3 percent, down from the previous estimate of 3.5 percent as an “exceptionally challenging macroeconomic backdrop” forced the IEA to change its forecasts.

For 2013, the global economy should grow 3.8 percent, down from the previous 4.1-percent estimate based on figures in April from the International Monetary Fund, it added.

“Concerns are mounting on the sustainability of the eurozone, there has been a definite easing in China’s economic impetus and the US outlook has weakened,” the IEA said in its latest monthly report.

“Ongoing debt concerns across the developed world will likely see associated austerity measures curtailing government, business and consumer expenditure levels alike,” it said.

The IMF is expected to issue new economic growth forecasts shortly.

Oil prices were slightly easier, with New York’s main contract, light sweet crude for delivery in August, down 34 cents to $85.47 a barrel.

Brent North Sea crude for August shed 22 cents to $100.01, having fallen as low as $89 in late June after hitting highs in March of around $125.

In terms of oil demand, the IEA left its 2012 growth forecast at around 800,000 barrels per day (bpd) to around 89.9 million bpd, with 2013 gaining a “relatively muted” 1.0 mbd to 90.9 mbd, led by Asia.

The increase next year, while marginally more than the expected 2012 gain, was much less than would have been expected based on trends before the 2008 global financial crisis brought the economy to its knees, it said.

The eurozone debt crisis has since undercut growth further.

The IEA said that total global oil supply in June was down 500,000 bpd to some 90.4 mpd, with OPEC production slipping 100,000 bpd to 31.8 mpd.

Among OPEC members, the IEA noted that Iranian output had slumped to near 22-year lows at 3.2 mbd in June, down 100,000 bpd from May as US and EU sanctions ramp up from July 1.

However, despite the fall in output, the IEA noted that Iran exports to China had increased substantially by 300,000 bpd to 800,000 bpd and said it was now harder to track Iranian production and shipments.

The US and EU imposed tougher sanctions on Tehran over its nuclear energy programme, claiming it is a cover for atomic weapons development, a charge Iran consistently rejects.

On Wednesday, OPEC left its world oil demand forecast for 2012 unchanged at 88.68 mbd, putting 2013 at 89.50 mbd, up 820,000 bpd and compared to the 890,000 bpd gain expected in 2012.

Like the IEA, the Organisation of Petroleum Exporting Countries also cited the uncertain economic outlook for its cautious assessment.

original article

_

A boom in unconventional natural gas over the next 20 years could see the United States and others benefit from cheaper energy while the importance of the Middle East declines, the International Energy Agency (IEA) said on Tuesday.

Growth in shale and other newly available forms of natural gas in the United States and China could match gains made in conventional gas in Russia, the Middle East and North Africa combined, IEA Chief Economist Fatih Birol told Reuters in an interview.

“Unconventional gas will fracture the status quo, and will be a complete game changer with major geopolitical implications,” Birol said.

High natural gas prices over the past years have helped spur investment in previously unavailable, unconventional gas reserves that include so-called tight-gas, shale gas, and coalbed methane resources.

Yet a boom in these resources can only happen if measures are taken to ensure these reserves are extracted in a socially and environmentally satisfactory way, the IEA said in a report presented in London on Tuesday.

Environmental group Greenpeace said in reaction to the report that it opposed the exploration of unconventional gas.

“Greenpeace opposes the exploitation of unconventional gas reserves because the impacts have not been fully investigated, understood, addressed and regulated,” it said. “The IEA report essentially affirms that these concerns are real but falls short of actually addressing them.”

The IEA report underscored the economic gains offered by the rapid growth in unconventional gas, with “countries that were net importers of gas in 2010, including the United States, gaining the wider economic benefits associated with improved energy trade balances and lower energy prices.”

Australia, India, Canada and Indonesia are also set for big increases in unconventional gas production, it said.

“The share of Russia and countries in the Middle East in international gas trade declines from around 45 percent in 2010 to 35 percent in 2035,” the report said.

For Europe, where shale gas production is expected to play a smaller role than elsewhere, Birol said that unconventional gas growth could still be enough to offset an ongoing decline in conventional gas output.

“The main benefit for Europe will that there will be lower gas import prices, putting pressure on oil-indexation of traditional gas supply contracts,” Birol said.

Europe’s main gas suppliers, Russia and Norway, sell their gas under long-term contracts that are linked to the oil market.

Because oil prices have remained firm on strong demand from emerging economies while European gas prices have fallen on weak domestic demand, European gas suppliers are forced to sell imported gas to their customers at a loss, and utilities lose money when generating electricity from imported gas.

The IEA said this price structure could change as a result of a global unconventional gas glut.

The report said that natural gas could become the world’s second most important energy source after oil within the next two decades, should the right rules be introduced to ensure safe and environmentally sustainable use of unconventional gas resources.

Global gas demand could rise by over 50 percent between 2010 and 2035 and reach 25 percent of the world’s energy mix, overtaking coal to become the second largest primary energy source after oil, the IEA said.

Growth in the gas sector would equal the combined growth in the coal, oil and nuclear sectors and outstrip expansion in the renewable energy sector, the IEA said.

“Production of unconventional gas, primarily shale gas, more than triples to 1.6 trillion cubic feet in 2035,” the IEA said.

“The share of unconventional gas in total gas output rises from 14 percent today to 32 percent in 2035.”

It noted the majority of the gas production increases would come after 2020 as producers needed time to develop a commercial unconventional gas sector.

COSTLY REGULATION NEEDED

The IEA said the rules needed to ensure unconventional gas production is both environmentally and socially acceptable would raise production costs.

“I hope that the industry will recognise that it will be tested against the worst practices in the sector,” Birol said.

The report said such measures “could increase the overall financial cost of developing a typical shale gas well by an estimated 7 percent.”

Yet should the industry fail to implement strict enough rules, the IEA said a lack of public acceptance would likely mean that only a small share of unconventional gas resources would become available for development.

“As a result, unconventional gas production rises only slightly above current levels by 2035, from 21 percent in 2010 to 22 percent in 2035, remaining well behind coal.”

Yet Birol said he was “cautiously optimistic” that industry and governments would introduce the needed measures to enable a global gas boom.

Shale gas is extracted using a technology called hydraulic fracturing or fracking, which involves pumping large amounts of water and chemicals underground.

The technology has been blamed for causing slight earthquakes and been banned in several countries, but it has also transformed the U.S. energy sector and caused domestic energy prices to plummet in recent years.

GLOBAL GAS MARKET

The IEA said that a gas glut fueled by unconventional extraction methods would lead to a boom in U.S. exports of liquefied natural gas (LNG) and impact global gas prices.

The advent of North American LNG exports by 2020 will more than double U.S. gas prices from current historic lows but bring down prices in the world’s biggest LNG market, Japan, the IEA said.

The U.S. could be exporting 35 billion cubic metres by 2020, around 20 percent of Russia’s current export levels, according to the report.

The IEA said this would lift U.S. domestic gas prices from $2 currently to $5.4 per million British thermal units (mmBtu), which is still cheap by Asian standards of around $18 per mmBtu.

That influx of cheap U.S. gas would drive competition on global gas markets and cut gas prices in Japan to $12.4/mmBtu by 2020.

original article

-

Madrid (Platts)–17Oct2011/555 am EDT/955 GMT

The International Energy Agency will focus on the negative impact of political turmoil in the Middle East & North Africa on oil-sector investment, as well as the Fukushima nuclear disaster threatening nuclear capacity growth, in the body’s upcoming World Energy Outlook 2011. The IEA report, due for publication on November 9, will have a special focus on coal, looking at how coal markets may be affected by those two key events, as well as the role of the sector after a surge in gas developments due to the tapping of new shale deposits, IEA senior energy analyst Pawel Olejarnik said at the Coaltrans World Coal conference in Madrid on Monday.

While coal demand in OECD countries may stabilize and never rise above pre-financial crisis levels, new Chinese and Indian coal plants may help add 600 GW of coal-fired plants globally, further shifting market dynamics, he said.

“There is a new world energy order, coal markets are shifting to Asia,” Olejarnik said. “As coal is a solid fuel, our projection for coal’s position remains solid.”

The IEA previously expected China, India and Indonesia to account for 90% of total incremental coal demand growth.

The Paris-based body this winter will publish for the first time a “medium term” coal market report, studying demand and supply through to 2016 with a focus on logistics, Olejarnik said.

The new outlook will propose that a “golden age” for gas is a possibility, as shale and coal bed methane projects help power output, and climate policy may prioritize gas use, to displace coal and oil-fired plants. The analyst cited industry forecasts that China’s gas demand may more than double to 250 billion cubic meters by 2015.

The proposal for gas boosting further its share of the primary energy mix is based on “if the right demand side measures and if enough unconventional sources are developed,” he said.

The IEA said that by 2030 natural gas could overtake coal as second largest fuel mix, as shale gas developments in China, Europe and North America as well new LNG facilities in Australia help boost supplies from unconventional gas sources.

Original Article

-

By Associated Press, Published: September 15

PARIS — The International Energy Agency is ending an emergency program of releasing oil from rich-country reserves, an effort to increase supply amid disruptions prompted by Libya’s war.

The United States and 27 other countries agreed in June to release 60 million barrels of crude oil to the market to offset Libya-related disruptions, and stave off a spike in energy prices.

The Paris-based agency said Thursday that the collective action “has been terminated.”

The IEA’s governing board “concluded that the interrupted Libyan supplies have been successfully addressed” by the collective release and increased production from producer countries. It also notes weakening growth in oil demand.

Original Article

-

By James Herron
Fox Business

LONDON -(Dow Jones)- European governments are adopting a mixed stance to the possibility of a second release of oil from emergency stocks by the International Energy Agency to counter the disruption in Libyan exports, according to officials from member countries.

Officials from the U.K., the Netherlands, France and Italy say they are waiting for recommendations from the IEA, which is assessing market data this week, before deciding if another release is necessary.

The position of the German government, which failed to sell all of the oil from the first stock release, is less clear.

“The IEA has announced that it will review the situation on the oil market carefully,” a German government official told Dow Jones Newswires. “We have to await these recommendations.”

However, an official from Germany’s state-owned National Petroleum Stockpiling Agency, called EBV, told news agency Platts that “the word from Berlin is that there won’t be a second release.”

“There is a 90% chance the IEA won’t do a second release,” said Eberhard Pott, an EBV board director, according to the Platts report.

Germany sold just two-thirds of the oil it originally intended to release, according to IEA data. “The full amount of the available oil reserve hasn’t been called for,” the German government official said.

The other countries said they have adopted a wait-and-see approach. “Nothing is planned, but nothing is banned either,” said French Industry Minister Eric Besson at a press conference.

All of these countries collectively supplied a fifth of the 60 million barrels of oil released from emergency stocks last month.

The IEA said last week the initial stock release had proved effective, despite international oil prices rebounding to their level prior to the action. However, it also warned the oil market still looks increasingly tight through the remainder of the third quarter.

The agency will assess early this week if a second stock release in needed, said David Fyfe, the head of the IEA’s oil industry and markets division.

According to information posted on the IEA’s website, if the IEA decides an emergency stock release is required, it will send a detailed market assessment and plan for the volume of oil to be released to member countries. A stock release can then proceed, “if member countries agree or do not object to the proposal,” the website says.

–Beate Preuschoff in Berlin, Liam Moloney in Rome, Geraldine Amiel and Max Colchester in Paris, and Patrick Buis in Amsterdam contributed to this article.

Original Article

-

By LIAM DENNING

Officially, OPEC is peeved at the International Energy Agency for releasing oil from its stockpile. Unofficially, Saudi Arabia, the de facto leader of the Organization of Petroleum Exporting Countries, must be grateful.

OPEC rarely has been good at controlling oil prices. Its 1970s heyday turned to bust in the 1980s as high oil prices inflicted recession on consuming countries and encouraged energy efficiency and the development of new fields. Its members also rarely stick to output quotas.

OPEC’s other critical failure concerns its lack of investment in new capacity. A cartel can control prices only if it holds enough spare capacity to counter price spikes. Otherwise, it can put a floor under prices only by cutting back when demand drops. Yet most OPEC members are running flat out and the bulk of the organization’s spare capacity, more than three-quarters of it, is held by Saudi Arabia.

You might think high oil prices aren’t a problem for OPEC. And they aren’t in the short term. But it’s worth remembering that while OPEC has produced 436 billion barrels of oil since 1965, according to data from BP, it still has proven reserves of almost 1.1 trillion barrels. That’s a lot of money still to be made, provided high oil prices don’t force addicted consumers to get their energy fix some other way, as happened after the 1970s.

Saudi Arabia holds one in four of those 1.1 trillion barrels in the ground, giving it a big stake in keeping oil prices stable and consumer friendly over the longer term. Yet its spare capacity of three million barrels a day is now just 3.4% of global demand and using any of that by definition leaves a smaller cushion. That, in turn, encourages higher bids for oil futures; even if physical markets are well-supplied today, they might not be tomorrow.

The IEA’s release of emergency stocks, though representing only 3.9% of the total, delivered a jolt to such expectations. In effect, the IEA made its own “spare capacity” available in a way that oil bulls hadn’t expected. Rather than just focusing on Saudi Arabia’s ability to open up its taps, oil traders now also must contend with potentially disruptive moves by the IEA.

Whether this new paradigm is sustainable is an open question. By lowering prices, the IEA’s move ultimately encourages more oil consumption, which isn’t in consuming countries’ interest. On the other hand, a recession is a high price to pay for energy conservation. In the short-term, at least, the IEA and Saudi Arabia have a mutual interest in stabilizing oil prices below $100 a barrel, both to keep economies humming and Saudi Arabia’s long-term prospects intact.

Original Article

-

By David Blair, Energy Correspondent

Financial Times

The International Energy Agency could repeat its decision to release strategic oil reserves when the present 30-day draw down concludes, according to the organisation’s chief.

Nobuo Tanaka, director of the IEA, told a Financial Times energy conference on Tuesday that the oil market would be reassessed at the end of the agreed period for the current release of 2m barrels a day.

Asked whether the IEA’s board could decide again to draw on reserves, Mr Tanaka said: “It’s possible, if we need to.”

He added: “Our current decision is: let’s do it for 30 days and see how the situation goes.”

The IEA chose on June 23 to use the stockpiles held by its member states for only the third time in the agency’s 37-year history. Mr Tanaka said this decision was necessary because of the loss of Libyan production, which he said had deprived the market of a net 1.4m b/d, and the imminent return to service of many of the world’s refineries after a period of routine maintenance.

Mr Tanaka acknowledged that Saudi Arabia was increasing its own oil output because of these factors. But he said this would take several weeks and the IEA’s move was designed to fill the gap. Mr Tanaka noted that 1.6bn barrels were held in reserve by the organisation’s members. “If we don’t use it now, then when?” he asked.

But Abdalla El-Badri, secretary-general of Opec, has criticised the release of reserves, saying that it was done for “commercial” reasons, rather than the need to avert a genuine shortage of supply

Original Article