IEA’s Jones Says Oil Price Drags on Economy; GECF Is No OPEC
Richard Jones, deputy executive director of the International Energy Agency comments on oil prices, country-to-country partnerships to develop natural gas projects and the Gas Exporting Countries’ Forum.
Jones also discussed the differences between shale gas development in Europe and in the U.S. He spoke in interview in Oslo today. The IEA is an energy policy adviser to 28 industrialized nations including the U.S., Japan and Germany.
“We are seeing a very high price, which is leading to very large profits for oil producing companies, for oil producing countries.”
“The question is: are those prices justified in terms of the return on investment that led to those prices?”
“The other way you could ask the question: are they justified in terms of what is needed to produce the next barrel. And you get a different answer.”
“I think our concern is that today’s prices are quite high in terms of the import burden they place on importing countries particularly on emerging countries. Our concern is the drag on the world economy.”
“We would like to see more oil available on the market, we would like to see more spare capacity and we would like to see more investment.”
On Gas Partnerships, GECF:
“In principle I don’t see why not,” he said, in response to a question if Russia and Qatar could cooperate on developing gas projects.
“Of course, they are members of this gas exporting countries forum, and there are some people that are afraid that the GECF will develop into gas OPEC. We don’t really see that happening at this stage, maybe at some point in the future.”
“The typical projects cooperation is more between producers and consumers rather than between producers or among consumers getting together.”
“I could see how you might have some cooperation in the future when say the Qataris and the Russians are looking at developing resources in third countries, like international oil companies today cooperate.”
“But I think as long as they are developing their own domestic resources, that’s less likely.”
On Shale Gas:
“There are certainly some good basins in there, although the basins in Europe are not as large as they are in the U.S.
“The constraint in Europe is more above ground than below ground. In the U.S., in the parts of the country where shale gas is being exploited, you have lower population density than in Europe, so it’s easier to avoid the ‘not in my backyard’ problem, but also the legal rules are different in the U.S.”
“In the U.S. many people who own the land also own the mineral rights. Whereas in Europe, the mineral rights are usually completely separate from their property rights, so the minerals are often owned by the state. There is a completely different attitude by the landowners, which is critically important.”
“But the other thing is the U.S. has a lot of pipeline infrastructure and has been building it at the rate of about 1,000 miles a year, that is the hidden secret of the shale gas revolution in the U.S. -- it is easy to get the gas to market. Europe has not that well developed pipeline infrastructure.”
“Environmental rules may be also stricter in Europe. There are many differences why Europe would not reach the full potential that it could.”
“Now, there are some countries like Poland, that are actively looking at it. If Poland succeeds I am sure some of the countries in its immediate neighbourhood would be encouraged to follow its example.”
“But the country after Poland, which has the most resources is France and France has already said: ‘we are not going to allow exploration’.”
To contact the reporter responsible for this story: Meera Bhatia in Oslo firstname.lastname@example.org or
To contact the editor responsible for this story: Stephen Voss at email@example.com