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IEA: Development Delays Could Mean $200 Oil Prices

Delays in the development of new oil fields may spark a supply crunch and drive up oil prices above $200 per barrel, International Energy Agency's Executive Director warned.

LONDON (Kyodo) -- Delays in the development of new oil fields may spark a supply crunch and drive up oil prices above $200 per barrel, International Energy Agency Executive Director Nobuo Tanaka warned in a recent interview.

In the World Energy Outlook 2008 released on Wednesday, the Paris-based agency projected that crude oil import prices are likely to top $200 per barrel by 2030 on the back of booming demand in emerging economies like China and India.

"The IEA forecast is a warning scenario," Tanaka said in an interview with Kyodo News.

Crude oil futures in New York surged to an all-time high at $147 per barrel in July and have since dropped to around the $60-level due to the global economic downturn.

But Tanaka said the price surge in recent years was caused by neglected global efforts to explore new oil fields during the 1990s from fears that a boost in supplies would send oil prices lower.

"If we postpone the development of oil fields, there is a risk of inviting another supply crunch," Tanaka said.

The former Japanese director at the Organization for Economic Cooperation and Development also called for the construction of more power plants using energy-efficient technology to meet strong demand in high-growth countries.

In the annual report, the IEA said China and India will account for 51 percent of the increase in global primary energy demand between 2006 and 2030.

Tanaka said Japan will also need to use more renewable energy like geothermal heat and wind power for a stable supply of energy.

While crude oil prices have drifted lower recently, Tanaka said the level is still historically high and indirectly urged the Organization of Petroleum Exporting Countries not to slash output amid growing speculation that the 13-member cartel will again reduce oil production to lift prices.

"I am worried about supply when the global economy recovers," Tanaka said. "I hope OPEC will respond by closely watching market conditions."

In October, OPEC cut oil production by 1.5 million barrels per day to put a brake on falling prices in the first large-scale output reduction of over 1 million bpd in two years.

Tanaka, a former official in Japan's Economy, Trade and Industry Ministry, also warned that the Earth's temperature will rise nearly 6 degrees Celsius if efforts to prevent global warming fail against a backdrop of steady growth in energy demand.

"There is a need for the United States to clarify its position on combating global warming under the administration of U.S.-President-elect Barack Obama and win cooperation from emerging countries like China," he said.

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