28 May 2009

Energy agency warns of supply problems

11:25 am on 28 May 2009

The International Energy Agency says the search for new oil and gas is plummeting because of the recession.

The Paris-based body says spending on these projects will fall 21% this year compared with last year.

It says 20 large oil and gas projects were either cancelled or deferred indefinitely in just six months, cutting world supply by two million barrels of oil per day.

A further 35 projects, involving over four million barrels per day, were delayed for at least 18 months.

Most were in Canada's oil sands region, which has often been cited as the world's answer to a looming oil supply crisis.

The IEA also says less work is being done on existing oil fields to slow their rate of depletion.

The supply problems come as crude oil prices reach levels far higher during the current recession than they were during the boom of the 1990s.