Global instability no threat to gas and oil

Nations need not be over-concerned about energy security in the face of unexpected world events, BP chief executive Lord Browne said today.

Despite the disruptions of last year - including a serious economic downturn, continuing Middle East tensions and the attack on New York's World Trade Centre which led to military action in Afghanistan - the markets continued to operate and supplies of oil and gas were maintained.

Launching the 51st edition of The BP Statistical Review of World Energy 2002 in London, Browne said: 'If you analyse the data, you will see that the market sustained a secure flow of energy because there are diverse sources of supply.

'The US, for instance, imported 55 per cent of its oil needs last year, but it did so from 60 different countries, no one of which accounted for more than 16 per cent of the total. And that diversity can be sustained because there are now a number of major sources of supply coming on stream.

'There is oil and gas from the deep water of the Gulf of Mexico and the Caspian and Russia, oil from Angola and gas from Indonesia and Trinidad. Those concerned about energy should concentrate their efforts on maintaining that diversity.'

Browne warned that while the pursuit of energy self-sufficiency, taken too far, can be an 'own goal', sensible governments should ensure their fiscal systems encouraged the development of energy resources that can commercially be brought to market, not least here in the UK. 'That's why negative tax changes, which at the margin will deter investment and reduce future supply, are so unwelcome.'

Browne said it was clear that, while one day there will be new forms of energy, oil and gas will remain the predominant fuels for at least the next 30 years.

'The world has at least 40 years of oil supply and 60 years of gas, even before taking account of advances in technology which will increase the volumes we can recover,' said Browne. 'The challenge is to ensure the fiscal climate encourages the long-term investment necessary to secure the development of those supplies.'

The Review shows that oil continues to provide 40 per cent of the world's energy and gas supplies 24 per cent. It also shows also that global sources of supply are becoming increasingly diverse.

Over the past five years 18 countries have increased their oil production by more than 100,000 barrels per day (bpd), while production has fallen in only five. Gas production has become even more diverse: over the same period, 20 countries each increased their gas production by over 500 million cubic feet a day, while only one, Russia, declined by this amount.

Overall, the world's demand for energy grew by only 0.3 per cent in 2001 - the fourth year in the last five that energy demand has increased by less than the decade-trend annual rate of 2 per cent, outside the Former Soviet Union (FSU).

The demand weakness was primarily caused by the global economic recession and was further worsened by the disruptive after-effects of the September 11 attacks.

Demand was particularly low in most of Asia and the Americas. North American energy consumption fell by 2.4 per cent, the first drop in a decade. However, demand in China rose by 4.3 per cent, and the 1.2 per cent rise in the FSU was the third consecutive annual increase in the region as economic recovery continued.

The BP Statistical Review of World Energy 2002 is published on the internet at www.bp.com/centres/energy where data can be viewed and downloaded.