World Energy Prospects and Challenges

In recent years, demand for energy has surged. This unrelenting increase has helped fuel global economic growth but placed considerable pressure on suppliers buffeted by geopolitics, violent weather conditions and other potentially disruptive factors. On the demand side, increased energy security and environmental concerns may lead to changes in consuming countries’ energy policies. These uncertainties have been reflected in the market through volatility and high prices. Is the world running out of energy? Where will future supplies come from? Will adequate investment be made to make available adequate energy supplies to meet future demand? What role will governments play? The oil and gas resources of the Middle East and North Africa (MENA) will be critical to meeting the world’s growing appetite for energy. A large share of the world’s remaining reserves lie in that region. They are relatively under-exploited and so there is considerable potential for increasing production. But there is considerable uncertainty about the pace at which investment in the region’s upstream industry will actually occur, how quickly production capacity will expand and, given rising domestic energy needs, how much of the expected increase in supply will be available for export. The implications for both MENA producers and consuming countries are profound. This paper draws on the main findings of the World Energy Outlook 2005, published by the International Energy Agency. The 2005 Outlook assesses quantitatively the prospects for global energy markets through to 2030, with a special focus on the Middle East and North Africa. In addition, it analyses the possible impact of deferred investment in the region’s energy sector and also considers the potential effects of changing policies in consumer countries to address energy security and environmental concerns. The World Energy Outlook 2006 will build on this analysis and develop it even further. Global Energy Trends Global energy needs are likely to continue to grow steadily for at least the next two-and-ahalf decades. If governments stick with current policies – the underlying premise of the World Energy Outlook’s Reference Scenario – the world’s energy needs would be more than 50% higher in 2030 than today, an average annual growth rate of 1.6%. More than twothirds of the growth in world energy use will come from the developing countries, where economic and population growth are highest.