Credit crisis adds to risk of oil supply crunch: IEA

By Jane Merriman

LONDON (Reuters) - The credit crisis increases the risk the world's oil reserves will not be drilled fast enough to meet global demand growth, the International Energy Agency said on Wednesday.

The agency's World Energy Outlook for 2008 stopped short of sounding the alarm oil supplies could have peaked.

But it highlighted obstacles to accessing new fields that include the increasing dominance of national oil companies as well as dwindling amounts of credit.

Many investments are being postponed because of the credit crisis and its effects on global economic growth and energy demand.

"The financial crisis may have eclipsed the focus on longer term concerns about energy," Nobuo Tanaka, IEA executive director said at a news conference to launch the report.

"I emphasize the need to take a longer term view to avoid a worsening supply crunch."

For major international oil companies have been investing enough so far, but looking ahead, the IEA estimated the industry needed to spend more than $26 trillion in the next 20 years to ensure adequate energy supplies, an increase of more than $4 trillion from estimates in its 2007 World Energy Outlook.

"Some 30 million barrels per day of new capacity is needed by 2015," said the IEA, which advises industrialized countries.

"There remains a real risk that under-investment will cause an oil-supply crunch in that timeframe."

In oil, upstream investment spending has risen in nominal terms, but much of the increase was because of high costs and because cheaper reserves were off-limits to international oil companies.

The gap between what was being built in terms of new capacity and what would be needed to keep pace with demand was set to widen sharply after 2010, the IEA said.

The growing influence of national oil companies would have a major impact on where investments were made.

"It will be a new world, the national oil companies will make the investment decisions, but based on different factors than those used by the international oil companies," said Fatih Birol, IEA chief economist.

NON-OPEC PEAK

The IEA's projections pointed to a rise in world oil supply to 106 million barrels per day (bpd) in 2030 from 84 million bpd in 2007.