World is in its ‘first truly global energy crisis’ – IEA’s Birol

SINGAPORE, Oct 25 (Reuters) – Tightening markets for liquefied natural gas (LNG) around the world and major oil producers cutting supply have put the world in the middle of “the first real global crisis of energy”, the head of the International Energy Agency (IEA). ) said on Tuesday.

Rising LNG imports to Europe amid the Ukraine crisis and a potential increase in Chinese appetite for the fuel will tighten the market as 20 billion cubic meters of new LNG capacity comes on the market in next year, said IEA Executive Director Fatih Birol during the Singapore International Energy Week.

At the same time the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to cut 2 million barrels per day (bpd) of output is a “dangerous” decision. because the IEA sees global oil. demand growth of close to 2 million bpd this year, said Birol.

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“(It’s) very dangerous because many economies around the world are on the brink of a recession, if we’re talking about a global recession…I see that this decision is not very good,” said he.

Rising global prices of many energy sources, including oil, natural gas and coal, are hurting consumers at the same time they are facing rising inflation in food and services. High prices and the possibility of rationing pose a risk to European consumers as they prepare to enter the Northern Hemisphere winter.

Europe could get through this winter, albeit a bit battered, if the weather stays mild, Birol said.

“Unless we have an extremely cold and long winter, unless there are any surprises in terms of what we see, for example the Nordstream pipeline explosion, Europe should get through this winter with some economic and social bruises,” he added.

For oil, consumption is expected to grow to 1.7 million bpd in 2023 so the world will still need Russian oil to meet demand, Birol said.

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G7 countries have proposed a mechanism that would allow developing countries to buy Russian oil but at lower prices to curb Moscow’s profits after the war in Ukraine.

Birol said that the plan still has many details that need to be settled and will require the purchase of major oil importing countries.

A US Treasury official told Reuters last week that it was unreasonable to believe that up to 80% to 90% of Russia’s oil would continue to flow outside the price cap mechanism if Moscow sought to scrap it. .

“I think it’s good because the world still needs Russian oil flowing into the market at the moment. 80%-90% is a good and encouraging level to meet the demand,” said Birol.

While there are still large amounts of strategic oil reserves that could be tapped during supply disruptions, another release is not on the agenda, he added.

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ENERGY SECURITY DELAYS THE GROWTH OF RENEWABLES

The energy crisis will be a turning point for the acceleration of clean sources and for the formation of a sustainable and secure energy system, said Birol.

“Energy security is the number one driver (of the energy transition),” said Birol, as countries see energy technologies and renewables as a solution.

The IEA revised its forecast for renewable power capacity growth in 2022 to a 20% year-on-year increase from 8% previously, with around 400 gigawatts of renewable capacity added this year.

Many countries in Europe and elsewhere are speeding up the installation of renewable capacity by cutting permitting and licensing processes to replace Russian gas, Birol said.

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Reporting by Florence Tan, Muyu Xu and Emily Chow; Editing by Jacqueline Wong and Christian Schmollinger

Our Standards: The Thomson Reuters Trust Principles.

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