BP Chief Exec warns of painful times ahead in energy market

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London: For the first time ever, non-OECD oil consumption exceeded that of OECD nations, according to the latest issue of BP’s highly regarded Statistical Review of World Energy, with China and India between them accounting for more than three quarters of incremental growth.
Without new energy supplies, BP’s Tony Hayward warns, “the historic tilt in energy demand to the non-OECD world we reveal today may prove a harbinger of some very painful times ahead for us all”. Hayward says experts have been predicting such a shift for some time, but now it’s actually happened. “It’s a trend which will continue to affect prices and raise questions about the sustainability of economic growth, energy security and climate change,” the BP boss says. “Governments and companies both have to find ways to make sure that investment in new energy - in all its viable forms - continues through this downturn.”
Another worrying revelation from the latest Statistical Review: world oil reserves in 2008 fell for the first time in a decade, led by declines in Russia, Norway and China. “Oil reserves totalled 1.258 trillion barrels at the end of last year, compared with a revised 1.261 trillion barrels a year earlier,” according to the Review.  The energy company says the world has enough oil to last 42 years at current production rates. For gas and coal, the corresponding figures are 60 years and 122 years. 
Hayward is concerned about comments that where markets are allowed to work, they do generate the investment required. But he warns that too much meddling by governments will slow the pace of exploration and production and put future energy security at risk. In countries where normal market mechanisms have been constrained, new supplies have declined despite higher prices. On the other hand, in North America there has been the largest incremental gain to natural gas supplies ever recorded, a result of increased investment and technological innovation which have made it cost-effective to exploit new resources. [10/06/09]