The International Energy Agency (IEA) predicts that there will be monumental changes in the global energy industry during the next two decades. Some of these changes are already underway, including the fact that the U.S. bid for so-called energy independence may not only become a reality, but that it is also possible that the U.S. would undergo a transformation from being the world's largest importer of oil and gas, to being a hydrocarbon exporter and the world's largest producer of crude oil. Another possible development alluded to by the IEA would see the world cutting up to 20 percent of its energy consumption, through conservation and more efficient use of energy. The transformation in the U.S. balance of energy, that is to say, from a net importer of energy to a net exporter that has self-sufficiency in energy resources, represents a strategic shift, not only in the global balance of energy, but also in international politics, particularly as concerns the countries of the Middle East. Meanwhile, with regard to energy conservation, this is an ambitious goal that the industrialized countries and the IEA have for long sought to achieve. But so far, the success has been modest, and not commensurate with the desired levels. If these forecasts indicate anything, it would be that we are face to face with some fundamental changes that will have great implications on the industry, according to the IEA report titled World Energy Outlook 2012, released last week. For one thing, the report confirms that North America is undergoing a crucial stage that will completely alter the oil and gas trade in various parts of the world. But the IEA's report also goes on to mention that there are vast possibilities for other major changes in the industry, through the more efficient consumption of the world's energy. In this regard, the report stated that by 2035, it is possible for the world to cut the demand for energy by one-fifth, compared to current levels. In light of this projection, the report comes to the conclusion that “energy efficiency is just as important as unconstrained energy supply, and increased action on efficiency can serve as a unifying energy policy that brings multiple benefits." Of course, the IEA reflects the interests of the industrialized consumer countries, paying a lot of attention to producing studies and research papers, most importantly its annual World Energy Outlook. The hypothesis and conclusions advanced by this annual report are taken seriously by experts and officials involved in the global energy industry. The report emphasized the importance of the North American continent for the world energy industry. This reflects the growing awareness of the role of shale oil and gas, and tar sands, in North America in the international oil trade. The report predicts that the U.S. will be energy independent and an exporter of natural gas. By 2035, it is possible that North America may become an exporter of crude oil, which will increase and accelerate the changes taking place at the level of the global oil trade. It is also projected that around 90 percent of the Middle East's oil would go to Asian markets by 2035. But it is also expected that global demand for energy would grow by about a third by 2035, where China, India and the Middle East would account for about 60 percent of the growth in the demand for energy by 2035, with no considerable growth in demand for crude oil in the industrialized countries. Nevertheless, the latter's consumption of natural gas and alternative energy is expected to grow. The IEA estimates that demand for oil would rise by about 7 million barrels per day by 2020, exceeding 99 million barrels per day by 2035. It also approximates the real value of a barrel of oil at around $ 125, compared to the nominal value which will be around $ 215 per barrel. The IEA alludes to the fact that there will be a large increase in the production of unconventional oil and oil from deep-sea water during this decade, and also that Iraqi oil will account for about 45 percent of the increase in oil production until 2035. The IEA's information indicates that fossil fuels (oil and gas) will remain dominant in the energy markets, thanks to the subsidies given by governments. Indeed, the value of these subsidies increased by 30 percent in 2011 to about 523 billion dollars annually, mostly accounted for in subsidies given in the Middle East and North Africa. Meanwhile, demand for natural gas will increase by about 50 percent, bringing the overall global consumption to about 5 trillion cubic meters by 2035. The IEA estimates that unconventional natural gas will account for 50 percent for the increase in gas production by 2035, mostly coming from the United States, Australia and China. Naturally, these are all assumptions, but they are nonetheless based on studies and a close follow-up of the industry and the markets. Ultimately, their importance lies in the fact that they are indicators and forecasts related to what can be expected, in light of the information and developments available or known. * Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
