World is in its ‘first truly global energy crisis’ – IEA’s Birol

SINGAPORE, Oct 25 (Reuters) – Shrinking worldwide liquefied natural gas (LNG) markets and cutting supplies from major oil producers has thrown the world into the midst of “the first truly global energy crisis,” said the head of the International Energy Agency (IEA). ) said on Tuesday.

In his speech in Singapore, IEA Executive Director Fatih Birol said that increased LNG imports to Europe amid the Ukraine crisis and a potential recovery in China’s fuel appetite will shrink the market, as only 20 billion cubic meters of new LNG capacity will hit the market next year. International Energy Week.

At the same time, the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies known as OPEC+ to cut production by 2 million barrels per day (bpd) is a “risky” decision as the IEA sees global oil. Birol said that there was an increase in demand of nearly 2 million barrels per day this year.

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“(This) is particularly risky because many economies around the world are on the verge of recession, if we’re talking about a global recession… I found this decision really unfortunate,” he said.

Rising global prices for a number of energy sources, including oil, gas and coal, are also affecting consumers as they deal with rising food and services inflation. High prices and the possibility of rationing are potentially dangerous for European consumers preparing to enter the Northern Hemisphere winter.

Birol said that if the weather remains mild, Europe will be able to survive this winter, albeit a bit worn out.

“Unless we’ve had an extremely cold and long winter, unless there’s any surprise in terms of what we’re seeing, like the Nordstream pipeline explosion, Europe should go through some economic and social hardships this winter,” he said.

Birol said that consumption for oil is expected to increase by 1.7 million barrels per day in 2023, so the world will still need Russian oil to meet demand.

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In order to limit Moscow’s revenues after the Ukraine war, the G7 countries proposed a mechanism that would allow developing countries to purchase Russian oil at lower prices.

Birol said the plan still has many details to be resolved and will require the purchase of major oil-importing countries.

A U.S. Treasury official told Reuters last week that it is not unreasonable to believe that 80 to 90 percent of Russian oil will continue to flow outside the price ceiling mechanism if Moscow opposes it.

“I think that’s a good thing because the world still needs Russian oil to flow to the market right now. 80-90% is a good and encouraging level to meet demand,” said Birol.

He added that while there is a large amount of strategic oil reserves that could be exploited during the supply cut, there is currently no other oil reserves on the agenda.

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ENERGY SECURITY PROVIDES RENEWABLE GROWTH

Birol said the energy crisis could be a turning point for accelerating clean resources and creating a sustainable and secure energy system.

“Energy security (it’s the number one driver of the energy transition),” said Birol, as countries see energy technologies and renewable energy as a solution.

The IEA revised its renewable energy capacity growth forecast for 2022 to nearly 400 gigawatts of renewable capacity this year, a 20% increase over the previous year from 8%.

Birol said many countries in Europe and elsewhere are accelerating the installation of renewable capacity by cutting permits and licenses to replace Russian gas.

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reporting by Florence Tan, Muyu Xu and Emily Chow; Editing by Jacqueline Wong and Christian Schmollinger

Our Standards: Thomson Reuters Trust Principles.

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