Risks remain due to sluggish recovery: OPEC
Oil producers and consumers will continue to face uncertainties and challenges due to the recovery being "more delayed than previously thought", according to the Organization of the Petroleum Exporting Countries' (OPEC) annual World Oil Outlook (WOO) report.
Acknowledging October's World Economic Outlook report from International Monetary Fund (IMF), which cut growth forecasts for the emerging world, OPEC revised global GDP expansion for 2013 down to 3 percent from the 3.2 percent it predicted in its last WOO report.
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OPEC emphasized significant changes at regional levels, with Indian, Chinese and Russian growth revised downwards, and with a more pessimistic view of the U.S.
"Many economies are forecast to grow below potential in the coming years due to a continued high debt-burden in developed economies," OPEC noted, "As well as less monetary support, causing potentially lower growth for investments for some time, and consequently slowing emerging economies."
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OPEC did say Europe's slow recovery was positive, although there was insufficient job creation, while growth acceleration was welcome in Japan and the U.S.
"In balance," the report said, "the situation is improving globally. In this regard, it is worth noting that this year's WOO does see higher medium-term economic growth, compared to the WOO 2012. But, risks remain skewed towards the downside."
OPEC sees oil prices remaining stable in the long-run, averaging $110 per barrel until 2020, with the cost then rising to $160 per barrel by 2035. The WOO report sees oil remaining a major player in satisfying the world's growing energy needs, with the demand for energy increasing by 52 percent over the projection period 2010–2035.
OPEC said that the demand for oil will increase by around 20 million barrels a day in the years to 2035, representing the first upward revision in oil demand growth since the WOO was first published. Developing countries, especially in Asia, are the important source for oil demand increases, from China and India as they move out of poverty and turn to fuel-based means of transportation.
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OPEC did comment on the increased attention paid to natural gas and the growing use of shale gas in the U.S. and Canada.
However, OPEC was cautious on the rise of the newly popular energy resource: "Despite the rapid rise of supply from shale gas and its evidently large resource base, there are many potential barriers to the continued rise in supply, in both the medium- and long-term. These include concerns about potential adverse environmental impacts, the disposal of waste water and excessive water use."
OPEC's report also comes after Amnesty International alleged that major oil companies such as Shell were not accurately reporting their oil spills in Nigeria, arguing that corroded pipes rather than theft and sabotage were the main cause.
Shell rejected what it described as "unsubstantiated assertions and said that the theft of crude oil was the "main cause of oil pollution in the Delta."
OPEC did not comment on the matter, but said that an expansion of oil refinery was likely to be achieved in Nigeria, with "several projects on the list and Nigeria is seeking partnerships with foreign investors for their implementation."