OPEC Eyeing Oil Invest Review On Talk Of Oil Alternatives

LONDON (Dow Jones)--The Organization of Petroleum Exporting Countries is eyeing a formal review that could eventually lead to less investment in exploring for future oil supplies because of endless discussion in consuming nations to reduce fossil fuel demand and fight global warming.

OPEC said in its monthly magazine published Thursday that trends in the U.S. and Europe toward the use of more renewable fuels like ethanol in road transport that are less polluting than oil had prompted discussions within the group.

"...in the light of the recent developments regarding the stated move awayfrom traditional fossil fuels - and oil in particular - OPEC member countries feel they ought to review their future expansion plans," the magazine said.

The magazine went on to say: "It would, in fact, make no sense for them to spend money unnecessarily on building or improving facilities when their customers are telling them they intend to minimize dependence on OPEC supplies."

Despite the wording of the article, Omar Ibrahim, an OPEC spokesman, said no decision had yet been taken by the group to review investment spending formally.

But he warned that consuming countries' "words and actions" about future oil use were sending the wrong message to OPEC's 12 members, which collectively provide roughly 40% of the 85 million barrels burned globally each day. That number is forecast to rise in the next two decades to over 50% as oil output falls in non-OPEC nations.

"What we are saying is that the wrong signals are being sent by consuming countries. The signals they are sending about using less oil are not helping members confidence about making future investments," he said.

OPEC members currently have more than $100 billion invested in ongoing projects, Ibrahim said.

"OPEC member states are developing countries. They are not going to overinvest and spend money on projects for oil that might not be used. They'd rather spend that money on development," Ibrahim said.

For their part, oil consuming countries like the U.S. and European countries are plowing many billions of dollars into alternative energy projects – from renewables to nuclear power - but those projects will still only make a minor dent in total energy use globally over the next few decades even in the most optimistic forecasts.

The International Energy Agency in Paris says crude oil, coal, and natural gas will remain the world's dominant energy source to 2030 - accounting for 83% of the overall increase in energy demand between 2004 and 2030.