IEA Says Less Oil Upstream Projects Could Cause Supply Crunch, Price Hikes

Rukhshan Mir (@rukhshanmir) Published November 13, 2018 | 05:03 AM

MOSCOW (UrduPoint News / Sputnik - 13th November, 2018) The decrease in the number of new upstream oil and gas projects could result in a supply crunch and a further growth of prices, the International Energy Agency (IEA) said in the World Energy Outlook 2018 report.

"Today's flow of new upstream projects appears to be geared to the possibility of an imminent slowdown in fossil fuel demand, but in the New Policies Scenario this could well lead to a shortfall in supply and a further escalation in prices," the report read.

According to the IEA, the largest supply crunch could be expected in the oil sector, as the average level of approvals of new conventional crude oil projects over the last three years "is only half the amount necessary to balance the market out to 2025."

The World Bank Group said at the One Planet Summit in Paris in December that it would cease to finance upstream oil and gas projects after 2019 "to align its support to countries to meet their Paris goals."