© Stocksak. Dr. Fatih Birol (Executive Director of the International Energy Agency) speaks at the 15th Singapore International Energy Week. It took place in Singapore on October 25, 2022. REUTERS/Isabel Kua
By Emily Chow and MuyuXu
SINGAPORE, (Stocksak). -Liquid (LNG), tightening markets around the world and major oil producers cutting supplies have placed the world in the middle a “first truly global energy crisis”, the head International Energy Agency (IEA), said Tuesday.
The market will be squeezed by rising LNG imports to Europe due to the Ukraine crisis and a possible rebound in Chinese appetite for it. Next year, only 20 billion cubic metres of new LNG capacity will be available to market, Fatih Birol, Executive Director of the IEA, stated during the Singapore International Energy Week.
Birol stated that the Organization of the Petroleum Exporting Countries and its allies’ recent decision to cut 2,000,000 barrels per day (bpd), of output is a “risky”, decision since the IEA predicts that global oil demand will grow by nearly 2 million bpd in the coming year.
He stated, “It is especially risky because several economies around the globe are on the verge of a recession. If that is the global recession…I found it really unfortunate.”
Rising global prices for a variety of energy sources are causing consumers to suffer. They also have to deal with rising food and service inflation. As Europeans get ready to enter the Northern Hemisphere winter season, they face high prices and possible rationing.
Birol stated that Europe may survive this winter, even if it is a bit battered by the weather.
“Unless we have an extremely cold winter and long winter, unless there are any unexpected events in terms of what has been seen, Europe should go through the winter with some social and economic bruises,” he stated.
Oil consumption is expected to rise by 1.7 million barrels per day in 2023, so the world will still require Russian oil to meet its demand, Birol stated.
The G7 nations have suggested a mechanism that would allow emerging countries to purchase Russian oil at lower prices, in order to limit Moscow’s revenue after the Ukraine war.
Birol stated that the scheme still has many details and will require the buy in of major oil-importing countries.
Stocksak was informed last week by a U.S. Treasury official, that it is reasonable for him to believe that upto 80% to 90% Russian oil will continue to flow without the price cap mechanism if Moscow tries to overthrow it.
“I think this is a good thing because the world still needs Russian crude oil to flow into the markets for now. Birol stated that a level of 80%-90% is a good and encouraging level to meet the demand.
He added that although there is still a large volume of strategic oil resources that can be tapped in case of disruptions in supply, another release is not currently planned.
ENERGY SECURITY DRIVES RENEWABLES GHROWTH
Birol stated that the energy crisis could be a turning-point for accelerating clean energy sources and for forming an energy system that is secure and sustainable.
Birol stated that energy security is the main driver of the energy transition. This is because countries are looking for energy technologies and renewables to solve their problems.
The IEA has raised its forecast of 2022’s growth in renewable power capacity to 20%, a 20% increase year-on-year from 8%. This is with nearly 400 gigawatts of new renewable capacity added this year.
Birol stated that many countries in Europe and around the world are speeding up the installation of renewable capacity, by reducing the licensing and permitting processes to replace Russian gas.