PARIS – THE United States will stride past Saudi Arabia and Russia to become the world's top oil producer by 2016, the West's energy agency said, bringing Washington closer to energy self-sufficiency and reducing the need for OPEC supply. But by 2020, the oilfields of Texas and North Dakota will be past their prime and the Middle East will regain its dominance - especially as a supplier to Asia, the International Energy Agency (IEA) said on Tuesday. The IEA, which advises large industrialised nations on energy policy, predicted in its 2012 World Energy Outlook the United States would surpass Riyadh as top producer in 2017. Introducing this year's outlook, IEA Chief Economist Fatih Birol said the agency now expects the re-ordering by 2016 - at the latest. "We see two chapters in the oil markets. Up to 2020, we expect the light, tight oil to increase - I would call it a surge. And due to the increase coming from Brazil, the need for Middle East oil in the next few years will definitely be less," he told Reuters in an interview. "But due to the limited resource base (of US tight oil), it is going to plateau and decline. After 2020 there will be a major dominance of Middle East oil." The IEA said oil prices would continue to rise and spur development of unconventional resources such as the light, tight oil that has fueled the U.S. oil boom, oil sands in Canada, deepwater production in Brazil and natural gas liquids. The Organisation of Petroleum Exporting Countries (OPEC) in the world oil market would decline by almost 8 percent by 2018. Oil prices will climb steadily to $128 a barrel in 2012 terms by 2035 - up $3 from 2012's outlook. Other nations are unlikely to match the success of the United States in tapping shale. While tight oil output is set to soar in the next few years, the Paris-based agency said the world was not "on the cusp of a new era of oil abundance". By the mid-2020s, non-OPEC production will fall back and countries in the Middle East - home to core members of the Organization of the Petroleum Exporting Countries - will provide most of the increase in global supply. Birol said it was essential that investments continue to be made in the plentiful, low-cost resources of the Middle East in order to meet growing demand from Asia. "The Middle East is and will remain the heart of the global oil industry for many years to come," he said. "Giving the wrong signal to Middle East producers may well delay investment. If we want Middle East oil in 2020, the investments need to be made by now." Rising US tight oil production is for now helping to meet growing demand, which the IEA forecasts will reach 101 million barrels per day (bpd) in 2035, a rise of 14 million bpd and up slightly from 99.7 million bpd expected last year. "Shale oil is very good news for the United States and for the world. But the demand is in Asia," Birol said. "First China, and then after 2020 driven by India. Therefore we need Middle East oil for the Asian demand growth." China is due to overtake the United States as the largest oil-consuming country and Middle East oil consumption is expected to surpass that of the European Union, both around 2030, the IEA said. India is forecast to become the largest single source of global oil demand growth after 2020. The share of the United States in global energy-intensive industries - chemicals, aluminium, cement, iron, steel, paper, glass and oil refining - will increase slightly thanks to cheaper energy. By contrast, the EU and Japan will lose one third of their current share. The IEA also said that up to 10 million bpd of global refining capacity was at risk as global refining centers were relocating closer to Asia. China and India are increasingly driving world energy demand as the United States' production boom puts it on track to become independent of the global market, the International Energy Agency said Tuesday. China is close to becoming the world's largest oil importer, while India will turn into the leading importer of coal in the next decade to lead the Asian surge, the Paris-based IEA said in its 2013 World Energy Outlook. "The dominance of Asia will be more and more visible," IEA executive director Maria van der Hoeven told The Associated Press. "Asia will be the clear center of the global energy trade." While per capita energy consumption will not be as high in Asia as in North America and Europe, "the demand and the thirst for energy (in Asia) in all its forms will be tremendous." At the same time, the United States is moving toward "meeting all of its energy needs from domestic resources by 2035," the IEA said. The IEA also noted that while new oil sources — from oil sands in Canada to deep-water wells in Brazil — will temporarily diminish thirst for crude from OPEC, which includes some of the world's leading oil exporters from Saudi Arabia to Venezuela and Nigeria, the Middle East will remain a crucial provider in the longer term. While the IEA sees global daily oil demand rising by 14 million barrels by 2035 to 101 million barrels, the production of conventional crude oil will fall by then to 65 million barrels a day. Other products, such as light, tight oil — also known as LTO or shale oil — will make up the difference. The IEA warned that despite environmental policies being implemented by several of the world's largest consumers, including the US and China, current projections show that energy-related carbon dioxide emissions will rise 20 percent by 2035. "This leaves the world on a trajectory consistent with a long-term average temperature increase of 3.4 degrees Celsius, far above the internationally agreed 2 degrees Celsius target," the IEA report said. Van der Hoeven said that while "energy efficiency measures are coming on in every part of the world ... the full potential of energy efficiency has not been realized." The IEA, which has 28 member countries and focuses on energy security, economic development and environmental awareness, noted that large differences in energy prices around the world, especially in gas and electricity, will make a difference in how industries will develop in different regions. "Natural gas in the United States still trades at one-third of import prices to Europe and one-fifth of those to Japan," the IEA said, adding that Japanese and European industries were paying twice as much as their U.S. counterparts for electricity.
