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

SINGAPORE, Oct 25 (Reuters) – Tightening liquefied natural gas (LNG) markets around the world and major oil producers cutting supply have put the world in the middle of “the first truly global energy crisis,” the head of the International Energy Agency (IEA) said. Is. ) said on Tuesday.

Fatih Birol, executive director of the International Energy Agency, said during the Singapore meeting: “The increase in LNG imports to Europe amid the Ukraine crisis and the possible return of the Chinese appetite for fuel will tighten the market, as only 20 billion cubic meters of new LNG capacity will enter the market next year.” will come. International Energy Week

Meanwhile, the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and its OPEC+ allies to cut production by 2 million barrels per day is a “dangerous” decision as the International Energy Agency sees global oil. Birol said demand growth this year is close to 2 million barrels per day.

“(It’s) particularly dangerous because several economies around the world are on the brink 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, natural gas and coal, are putting pressure on consumers as they deal with rising food and service inflation. High prices and the possibility of rationing are potentially dangerous for European consumers as they prepare to enter the Northern Hemisphere winter.

Birol said that if the weather stays mild, Europe may get through this winter, albeit somewhat damaged.

He added: “As long as we don’t have a very cold and long winter, unless something surprising happens from what we’ve seen, like the explosion of the Nord Stream pipeline, Europe will have to go through this winter with economic and social damage.”

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

The Group of 7 countries have proposed a mechanism that would allow emerging countries to buy Russian oil but at lower prices, limiting Moscow’s revenues in the wake of the Ukraine war.

Birol said the plan still has many details to complete and requires the buy-in of major oil-importing countries.

A US Treasury official told Reuters last week that it is not unreasonable to believe that 80 to 90 percent of Russian oil would flow outside the price cap mechanism if Moscow chose to ignore it.

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

He added: “While there is still a large amount of strategic oil reserves that can be used during supply disruptions, another release is not currently on the agenda.”

Energy security promotes the growth of renewable energies

Birol said that the energy crisis could be a turning point for accelerating clean sources and forming a sustainable and secure energy system.

“Energy security is the number one driver (of energy transition) because countries are looking at energy technologies and renewables as the solution,” Birol said.

The International Energy Agency has raised its forecast for renewable energy capacity growth in 2022 to 20 percent, up from 8 percent previously, with nearly 400 GW of renewable capacity added this year.

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

Reporting by Florence Tan, Moyo Kho and Emily Chow. Edited by Jacqueline Wang and Christine Schmullinger

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