Thursday, January 24 2008

BP Plc, Europe’s second-largest oil company, said the world is producing “all the oil it needs’’ and consumption may fall in the future because of the environmental pressure to cut greenhouse gas emissions.

Crude oil production will continue to rise this year, as it did in 2007, said Peter Davies, BP’s chief economist. Prices rose to US$100 a barrel earlier this month partly because the Organisation of Petroleum Exporting Countries restricted supplies, while spare production capacity has increased, he said.

“People will run out of demand before they run out of oil,’’ Davies said in Westminster, London. “We are not short of resources to produce.’’

Davies spoke to a meeting of the All-Party Parliamentary Group on Peak Oil and Gas. The cross-party group was founded last year by John Hemming, a Liberal Democrat MP for Birmingham Yardley, central England, to find out more about the outlook for future supply.

World oil production rose by about 0.2 percent last year to 85.5 million barrels a day, according to the International Energy Agency. Crude oil futures reached a record US$100.09 a barrel on January 3 in New York and prices are up 75 percent from a year ago. Production of 100 million barrels a day “is achievable,’’ Davies said.

Global proved oil reserves were at 1.2 trillion barrels at the end of 2006, little changed from a year earlier, according to BP’s Statistical Review of World Energy, published in June. They may further rise if Canadian oil sands and Venezuela heavy-oil resources are added, Davies said.

“Oil reserves are not scarce today,’’ he said. ``An imminent peak in oil production is not likely in the near term.’’

Demand for oil is expected to rise 2.3 percent this year to an average 87.8 million barrels a day worldwide, the IEA, an energy adviser to 27 nations, said in a monthly report yesterday. “There is a lot of investment now’’ in increasing the capacity of the oil service industry, Davies said. Booming demand for rigs, drilling equipment and other services has partly limited the tapping of new fields in the last few years.