By James Buckley
The threat of peak oil is a hotly contended topic that ultimately comes down to a balance between production and consumption.
Non-OPEC peak oil, or the point of maximum production of oil, will not occur before 2014, according to industry analysts Wood Mackenzie.
The company has disputed views that a pinnacle may be in sight and contends strong supply growth will prevail in the short term. Barring unexpected disruptions to production, Wood Mackenzie expects total global capacity to grow steadily from 86.3 million barrels per day (bpd) in 2006 to 96.7 million bpd in 2010.
"Since 2004...investment in both non-OPEC and OPEC projects has opened up...spare capacity," said Kate Broughton, Wood Mackenzie's head of oils research. "This upstream investment has given us a clearer vision of medium-term supply growth potential."
But, says Kate Dourian, Platts' Middle East editor, it is just a matter of time before non-OPEC oil declines because production is not being replaced fast enough to meet consumption. Dourian also stressed oil production is not as cut and dry as some analysts make out. "Some sources say half the world's oil has already been produced, whereas Aramco is saying there is still another trillion barrels out there," she said.
This means exploration success is critical to non-OPEC's long-term oil production outlook, said Broughton, who expects ‘yet-to-find' oil production in the Asia Pacific region to account for 28% of its output by 2025.
"No-one knows what technology will be available in future to aid production," added Dourian. "In Oman, saline water injection experiments are currently being undertaken. There are also enormous resources of oil sands in Canada.
"The focus will be on Russia and Saudi Arabia. Russia is playing a political game through its energy supplies. It wants control over transit routes, pipeline routes, and wants to use energy as a means of political power, which it has done by renationalising the industry. Unless we see a new leadership in Russia, there won't be supply growth at a level that can sustain demand.
"Also, some countries are becoming off limits. Major oil companies operating in Venezuela find themselves in a difficult position because of the resource nationalism that's spreading. These countries are now reluctant to share their reserves," she said.