Russia is anticipated to emerge as an alternative to Middle East oil supplies and poised to regain its position as the world's top crude-oil producer for the first time in a decade, as OPEC (Organization of Petroleum Exporting Countries) member nations comply with the cartel's quotas in 2002, according to a recently released Standard & Poor's forecast for the oil and gas production and marketing industry.
Short-term supply risks due to Middle East tensions and possible expansion of the war on terrorism to Iraq are mitigated by the increased stores of oil built up during the recent economic downturn, the financial analysts asserted.
Beyond these issues, the depletion of current reserves poses an ongoing long-term challenge for the industry. For US natural gas producers, the drop in actively-producing gas rigs in 2001 stemming from a slow economy's reduced demand could mean a return to the high gas prices of 2000, as demand outpaces the reduced supply this year.
"With the Middle East holding 66 percent of the world's oil reserves and supplying over 35 percent of its current production, heightened tensions in the Middle East could lead to a short-run supply of oil. Also, energy production and distribution are vulnerable to the risk of terrorist attacks on the US and elsewhere," says Tina Vital, Standard & Poor's Oil and Gas analyst.
"But a serious problem looms in the long run as well: the depletion of oil reserves. From 1980 to 1990, oil reserves rose by 54 percent. However, from 1990 to 2000, oil reserves have increased by only 1.4 percent.” Vital concludes: "The easy answer is yes: Oil is a non-renewable resource and will someday become scarce. The hard part is determining when." — (menareport.com)
© 2002 Mena Report (www.menareport.com)
