World Energy Outlook 2007

Chinese and Indian imports of gas are also higher in the High Growth
Scenario, though this effect is partially offset by lower imports in the rest of the
world (because of higher gas prices). Global inter-regional gas trade reaches
1 122 bcm in 2030, compared with 1 053 bcm in the Reference Scenario – an
increase of 7%. Unlike oil, additional gas exports come mostly from the
transition economies and Africa. Exports from the Middle East drop by 20%
compared to the Reference Scenario, as a result of the rise in that region’s
domestic consumption.
This analysis suggests that – all other things being equal – the higher the rate
of growth in energy demand in China and India, the greater concerns will be
about the security of energy supplies to consuming countries generally. China’s
and India’s oil and gas imports would be higher with faster economic growth.
As a result, the risk of a disruption may be higher, as more of the oil and gas
consumed worldwide is traded internationally and more of that oil is supplied
by a small number of countries – especially in the Middle East. Dependence on
Russian and Central Asian oil and gas would also grow. To the extent that
stronger demand reduces spare crude oil production capacity in OPEC
countries, the impact of an oil-supply disruption would also be more severe.
Most of the major oil-supply disruptions in recent decades have occurred in
the Middle East (Figure 4.10). Since 1967, close to 90% of all the oil lost in
major supply disruptions was caused by events in that region. One of the
most recent – in Iraq following the US-led invasion in 2003 – caused an
initial loss of 2.3 mb/d of production, equal to 2.9% of world demand.
Although much of that capacity has now been restored, persistent conflict in
the country continues to deter investment, making the short- and long-term
outlook for exports extremely uncertain. Other parts of the region remain
politically and socially unstable, casting doubt about investment in oil and
gas infrastructure and the reliability of exports, now and in the future.
Geopolitical tensions related to Iran’s nuclear programme are a major source
of uncertainty and have recently contributed to higher and more volatile
prices. The Israel-Palestine dispute and conflict between Israel and Lebanon
continue to cloud the political and economic climate in the region and
relations with the rest of the world.
Although protection of oil facilities in the region has been stepped up in recent
years, various threats to the integrity of production and transportation facilities
remain. In April 2007, a major al-Qaida plot to attack a number of oil
installations in Saudi Arabia was uncovered before it could be put into effect.
In 2006, a terrorist attack on the Abqaiq oil-processing plant, which handles
more than 60% of Saudi production, was also thwarted. But in Iraq, persistent
insurgent attacks on oil wells and pipelines continue severely to curtail exports.
Kuwaiti oil wells were sabotaged during the Iraqi occupation of 1990-1991.
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