US To Overtake Saudi As Top Oil Producer – IEA

The United States will overtake Saudi Arabia as the world’s top oil producer by 2017, the West’s energy agency said on Monday, predicting the major energy importer would soon achieve self-sufficiency in oil and gas.

The forecasts by the International Energy Agency (IEA), which advises large industrialised nations on energy policy, were in sharp contrast to previous IEA reports, which saw Saudi Arabia remaining the top producer until 2035.

“Energy developments in the United States are profound and their effect will be felt well beyond North America – and the energy sector,” the IEA said in its annual long-term report.

“The recent rebound in U.S. oil and gas production, driven by upstream technologies that are unlocking light tight oil and shale gas resources, is spurring economic activity – with less expensive gas and electricity prices giving industry a competitive edge,” it added.

The IEA said it saw a continued fall in U.S. oil imports with North America becoming a net oil exporter by around 2030.

“The United States, which currently imports around 20 per cent of its total energy needs, becomes all but self-sufficient in net terms – a dramatic reversal of the trend seen in most other energy importing countries,” it said.

IEA Chief Economist Fatih Birol told a news conference in London he believed the United States would overtake Russia as the biggest gas producer by a significant margin by 2015.

By 2017, the United States would become the world’s largest oil producer, he said.

The IEA said it saw U.S. oil production rising to 10 million barrels per day (bpd) by 2015 and 11.1 million bpd in 2020 before slipping to 9.2 million bpd by 2035.

Saudi Arabian oil output would be 10.9 million bpd by 2015, the IEA said, 10.6 million bpd in 2020 but would rise to 12.3 million bpd by 2035.

The U.S. oil boom would accelerate a switch in the direction of international oil trade, the IEA said, predicting that by 2035 almost 90 per cent of oil from the Middle East would be drawn to Asia.

However, global energy demand would push ever higher, growing by more than a third to 2035, with China, India and the Middle East accounting for 60 per cent of the growth.

A rise of 1.8 billion in the world’s population to 8.6 billion would lead to a spike in global oil demand by more than a 10th to over 99 million bpd by 2035, keeping pressure on oil prices, the IEA said.

The agency’s central “New Policies” scenario, which assumes a range of measures are taken to curb oil consumption in Europe, the United States, China and elsewhere, sees the average import cost of oil rise to just over $215 per barrel by 2035 in nominal terms, or $125 in 2011 terms.

If fewer steps are taken to promote renewable energy and curb carbon dioxide emissions, oil was likely to exceed $250 per barrel in nominal terms by 2035 and reach $145 in real terms – almost level with the record highs seen four years ago.

The report assumed a huge expansion in the Chinese economy, which it saw overtaking the United States in purchasing power parity soon after 2015 and by 2020 using market exchange rates. Chinese real gross domestic product is expected to increase by 5.7 per cent annually between 2011 and 2035.