The world is going through its “first truly global energy crisis” – IEA’s Birol

SINGAPORE, Oct 25 (Reuters) – Tighter liquefied natural gas (LNG) markets around the world and reduced supplies from major oil producers have put the world in the midst of “the first truly global energy crisis”, said the head of the International Energy Agency (IEA). ) said on Tuesday.

Rising LNG imports into Europe amid the Ukraine crisis and a potential rebound in Chinese appetite for fuel will tighten the market, as only 20 billion cubic meters of new LNG capacity will hit the market the next month. next year, IEA Executive Director Fatih Birol told the Singapore conference. 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 production by 2 million barrels per day (bpd) is a decision “risky” because the IEA sees global oil demand growing nearly 2 million bpd this year, Birol said.

“(It’s) particularly risky as several economies around the world are on the brink of recession, if we’re talking about the global recession… I found this decision really unfortunate,” he said.

Soaring global prices for a number of energy sources, including oil, natural gas and coal, are hammering consumers even as they already face rising food and fuel inflation. services. High prices and the possibility of rationing are potentially dangerous for European consumers as they prepare to enter the northern hemisphere winter.

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

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

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

The G7 countries have proposed a mechanism that would allow emerging countries to buy Russian oil but at lower prices to cap Moscow’s revenue following the war in Ukraine.

Birol said the program still has many details to iron out and will require buy-in from major oil-importing countries.

A US Treasury official told Reuters last week that it is not unreasonable to believe that up to 80-90% of Russian oil will continue to exit the price cap mechanism if Moscow seeks to flout it.

“I think it’s good because the world still needs Russian oil to come to market for now. A level of 80% to 90% is good and encouraging to meet demand,” Birol said. .

Although there is still a huge volume of strategic oil reserves that can be exploited during a supply disruption, another release is not currently on the agenda, he added.

ENERGY SECURITY DRIVES GROWTH OF RENEWABLE ENERGY

The energy crisis could be a turning point for accelerating clean sources and forming a sustainable and secure energy system, Birol said.

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

The IEA has revised up forecasts for renewable energy capacity growth in 2022 to a 20% year-on-year increase from 8% previously, with nearly 400 gigawatts of renewable capacity added this year.

Many countries in Europe and elsewhere are accelerating the installation of renewable capacity by reducing authorization and licensing processes to replace Russian gas, Birol said.

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

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