World Energy Demand Poses Dilemma for Producers and Consumers

Qatar Energy Minister sees fossil fuels as world's main energy source for foreseeable future but acknowledges the problem posed by their greenhouse gas emissions.

Published: 08-Jan-2005

DELHI: Qatar's Second Deputy Premier and Minister of Energy and Industry H E Abdullah bin Hamad Al Attiyah said that the demand for energy will continue to grow mainly due to the increase in population numbers and general spread of prosperity especially in China, India and parts of Latin America.

Addressing the round table conference on 'Regional Cooperation - Key Energy Ssecurity' here on Thursday, Abdullah bin Hamad said besides coal, oil and natural gas will continue to be the main source of energy, simply because they are the least expensive and most flexible.

"There are two main issues that can be considered as the challenges for energy security in the future. One is related to supply and demand and the other relates to the environment, climate change and global warning attributed to greenhouse gases. We cannot have economic growth without increasing energy use and we do not have, as yet, the technical solutions that will allow us to have more energy without carbon dioxide," Abdullah bin Hamad said.

Thanking the host and co-host of the conference for giving the opportunity to exchange views on issues so vital, Abdullah bin Hamad said: "We in Qatar, in the light of our national and regional energy interests, consider dialogue of this nature very helpful for policy and planning decisions."

Abdullah bin Hamad said that in 2003 and 2004 the growth in demand for oil had been so strong that, for the first time in 30 years, growth in oil demand almost matched the growth of GDP. Recently China's economy was often mentioned as a key factor in the strong growth in world oil demand and recent high prices for crude oil and petroleum products, he said.

Abdullah bin Hamad said China, which has become the second biggest consumer of oil products after the US and rapidly gaining on Japan in total net crude oil imports is a good example of demand growth linkage to GDP and the spread of prosperity. China's GDP per capita reached $1,000 in 2003, a level which generally triggers marked increase in travel by bus, car and airplane, he noted.

Car sales jumped from 222,000 in 1999 to 2.04 million in 2003 and recorded a further rise of 30 per cent during the first half of 2004. In 2004, demand growth was 23 per cent for petrol and 34 per cent for jet fuel, he said. Noting that demand for electricity is increasing at over 10 per cent per year and electricity blackouts are causing additional petroleum product demand for generators in factories and households, Abdullah bin Hamad said because of the growth of heavy industries and capital goods manufacturing as well as the improved standards of living, the expected increase in energy demand in china, and for that matter India, will increasingly dominate the global energy scene.

"This increased dependence on distant suppliers make us need to focus on international trade as well as security of supply and the consequences and implications of political and strategic agendas," he said. "If we were to examine some aspects of today's global energy scene we find many issues that deserve analysis and discussion," he added.

The Minister said the fear factor, which had more than its fair share of media time, is related to possible problems in some of the main producing areas. "If we are to add the demand of Japan and Korea, the other two main economies in the east, makes Asia needing an ever-increasing share of the global energy pool. While there is no foreseeable worry about energy supplies for a few decades to come, but the fact that supply is not co-located with demand, might represent some challenge for energy security," .he said.

"The major consuming regions will, irrespective of their efforts to diversify their supply sources, will still need to import substantial volumes of oil and gas from distant suppliers. This factor will remain with us as long as spare production capacities remain low," Abdullah bin Hamad said.

The Second Deputy Premier stressed that today's spare oil production capacities are the lowest in 20 years and are in fact total less than the production capacities of several individual producers. "This means that the loss of the production of any of these producers will create a shortage in supply and higher prices. Therefore, the solution is increasing the global production capacity," he said.

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