SYED RASHID HUSAIN FATIH Birol is the current guru of the energy world. When he speaks, the world listens. Since the launch of the World Energy Outlook early in November, Fatih has been on move, traveling from one city to another and from one continent to other. And it is always refreshing and intellectually reinvigorating to hear from him. He was in Ottawa last Monday, detailing the salient features of the WEO-2012 before a select gathering of diplomats, academics, energy pundits, journalists and interested students at the Carleton University. The world has indeed changed and the energy world is in the midst of a major readjustment – with huge geo-political implications, most now agree and underline. And Fatih too is mincing no words: “A revolution is in the making. A new global energy landscape is emerging.” And this shift is going to have huge geo-political implications, Fatih is now asserting. Referring to the shifting foundations of the global energy world, he points out the four major pillars of this shift: efficiency, security, environment and the globally changing energy scenario. He is of the view that the US, Iraq and Canada are the new major players emerging on the global energy horizon. The US production is to peak by 2020, however, it would overtake Saudi Arabia in output some three years earlier – by 2017. However, Fatih was quick to underline and clarify, in Ottawa too. The US would still be importing crude, but mostly from North America and that not only this reign would be short-lived – but even in those very years, when Washington would be the number one crude producer of the world, Riyadh would continue to be the world's largest exporter. And despite the fact that his projections were considerably behind Baghdad's official proclamations and pronouncements, he was of the view that Iraqi output would grow to six million bpd by 2020 and eight million bpd by 2035, emerging as a heavy weight in the energy world. And though this may be music to Barzanis, the following is also indicative of the growing divide between the southern region of Iraq and Baghdad. In his hour-long presentation, Fatih underlined that in the coming years and decades, the southern region of Iraq would continue to dominate output of the country. Politics of the country apparently would continue to be divided on regional and sectarian lines in the years to come, it now seems. Political stability thus could be hard to find in the war-torn country in the near future, one could argue now with some degree of statistics to back. And another interesting outcome of this shifting paradigm of the energy world is the growing amity between the oil producing Gulf and China. Ninety percent of the Middle Eastern oil will go to Asia – China and other emerging economies of the region – Fatih underscored. Americas would not need the Middle Eastern crude in real terms, he was straight, indicating the huge geo-political implications this shift would have in the realm of politics in the years and decades to come. Even in case of the emerging Iraq, as far as crude output is concerned, the bulk would be shipped to China. And with Chinese companies having considerable stakes in the growing Iraqi output, he highlighted the growing Baghdad to Beijing (B2B), relationship in the sector. And although other economies of Asia are also growing fast, emerging as major crude destinations, they still have a lot to catch up with China. There is simply no comparison between them and Beijing. And Fatih explained it with a wonderfully analogy. India is an emerging economy, with more than a billion people and a swelling middle class, none can deny. Yet Fatih underlined, India's per capita energy consumption is currently only comparable to the per capita consumption of the US in 1947. Commenting on current crude market prices, the IEA chief economist was of the view that though people still recall July 2008 as the point when crude touched the peak of $147 a barrel, yet in average, crude price in 2012 remain the highest in history. In response to a question about fair price of crude, although he avoided being specific, yet felt that at a price range of $85-90, extraction of all the available crude remains feasible and possible. The academician in Fatih has learned some diplomacy while at the IEA, one has to concede. And with shale gas revolutionizing the gas world too, he underlined that over the next few years traditional gas producers would lose their market influence. “They would be losing market share in the coming years.” And citing figures, he pointed out that over the next three years, the US was destined to outpace the largest gas producer of today – Russia. A gas revolution of real magnitude seems very much on the horizon, just round the corner. And then while underlining that the growing emphasis on efficiency, especially in the automobile sector, was contributing significantly to the emerging US energy independence, yet he emphasized that on a global scale, the 2/3rd potential of energy efficiency is still to be tapped. Fatih also underlined, in rather somber tone, that climate issues have gone off the radar of major governments and the world was almost on the verge of losing out its battle of keeping global warming below the 2 degrees Celsius mark by 2035, which scientists and environmentalists have been clamoring for years now. Although Fatih wanted to remain as diplomatic as possible, for obvious reasons, he almost gave in when asked if the 2 degrees C battle was a lost case now. The world is in for grimmer times, it now seems and the leaders are simply not ready to rise up to the challenge – for political reasons. And to add up to the picture, he reminded the world —some 13 billion people mostly in sub-Saharan Africa and in South Asia - India, Pakistan and Bangladesh — are suffering from energy poverty. Energy world needs to take note – and rather seriously. From the ashes of the old energy order, a new order is very much on the global horizon – now!
