At the helm: Nobuo Tanaka
IEA sees 21% drop in E&P spend
The International Energy Agency expects investment in oil and gas production to fall 21% in 2009 due to the financial crisis and ensuing economic slump, executive director Nobuo Tanaka said.
A Reuters report also quoted him as saying the IEA global power generation to fall 3.5% this year -- the first such decline since World War II.
The agency presented the report at a Group of Eight energy ministers meeting, where energy leaders debated the oil price needed to sustain investment without hurting a wider economic recovery.
"We estimate that global upstream oil and gas investment budgets for 2009 have already been cut by around 21% compared with 2008," the report said.
The IEA said that between last October and the end of April over 20 planned large-scale upstream oil and gas projects - valued at a total of more than $170 billion - were deferred indefinitely or cancelled.
Those projects involved around 2 million barrels per day of oil output and 1 billion cubic feet per day of gas capacity.
A further 35 projects were delayed by at least 18 months.
"Oil sands projects in Canada account for the bulk of the postponed oil capacity," the report said.
"Investment in non-Opec countries is expected to drop the most," it said, adding that spending cuts on existing fields also risked pushing up decline rates.
Investment cuts will only affect capacity with a lag, so in the near term weaker demand was likely to result in an increase in spare or reserve production capacity, the IEA said.
But it said that that if the current trend was sustained, there was a danger it could lead to a shortage of capacity and another spike in energy prices once the global economy recovers.
"The faster the recovery, the more likely that such a scenario could happen," it said.