Labour shortages could hit oil supply
Friday, 9 November 2007
Ed Crooks from London
SHORTAGES of skilled labour and capital investment mean oil supplies might fail to meet the expected growth in demand over the coming years, the head of the rich countries' energy watchdog has warned.
Nobuo Tanaka, executive director of the International Energy Agency (IEA), told the Oil and Money conference in London: "Despite five years of high oil prices, market tightness will actually increase from 2009. New capacity additions will not keep up with declines at current fields and the projected increase in demand."
He said that the IEA had revised up sharply to $5,000bn its estimate of the investment that the world's energy industries would need by 2030 to meet rising demand. That is a 16 per cent increase on last year's estimate of $4,300bn.
The IEA will give details of its estimates soon in its annual World Energy Outlook, which will focus on soaring demand for energy in China and India.
Mr Tanaka said the problem with oil supplies was not the lack of resources in the ground. "We are confident there will be enough conventional oil reserves to meet demand until 2030 and beyond," he said.
However, he said: "We are less confident there will be enough capital investment and skilled personnel to turn the reserves into production in a timely manner."
Shortages of staff, materials such as steel and equipment such as drilling rigs have fuelled a steep rise in costs worldwide.
Matthew Simmons of Simmons, a specialist energy investment bank, said 30,000 or more new staff would be needed to operate rigs now under construction. He said staff costs were rising at an average of 8.0 per cent a year, and by as much as 25 per cent for some skilled staff areas.
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Under syndication arrangement with FE
SHORTAGES of skilled labour and capital investment mean oil supplies might fail to meet the expected growth in demand over the coming years, the head of the rich countries' energy watchdog has warned.
Nobuo Tanaka, executive director of the International Energy Agency (IEA), told the Oil and Money conference in London: "Despite five years of high oil prices, market tightness will actually increase from 2009. New capacity additions will not keep up with declines at current fields and the projected increase in demand."
He said that the IEA had revised up sharply to $5,000bn its estimate of the investment that the world's energy industries would need by 2030 to meet rising demand. That is a 16 per cent increase on last year's estimate of $4,300bn.
The IEA will give details of its estimates soon in its annual World Energy Outlook, which will focus on soaring demand for energy in China and India.
Mr Tanaka said the problem with oil supplies was not the lack of resources in the ground. "We are confident there will be enough conventional oil reserves to meet demand until 2030 and beyond," he said.
However, he said: "We are less confident there will be enough capital investment and skilled personnel to turn the reserves into production in a timely manner."
Shortages of staff, materials such as steel and equipment such as drilling rigs have fuelled a steep rise in costs worldwide.
Matthew Simmons of Simmons, a specialist energy investment bank, said 30,000 or more new staff would be needed to operate rigs now under construction. He said staff costs were rising at an average of 8.0 per cent a year, and by as much as 25 per cent for some skilled staff areas.
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Under syndication arrangement with FE