Russian oil production fell by around 1% last year, official data showed, the country's first annual decline in a decade after large increases in previous years and a sign of things to come.

The Energy Ministry data showed that December crude and gas condensate production fell 1.6 percent, month-on-month, to 9.66 million barrels per day, bringing the annual average output to 488.105 million tonnes or 9.78 million bpd.

The data also showed that Russian oil exports via pipeline monopoly Transneft fell by more than 5% to 4.19 million bpd (209.152 million tonnes) last year from 4.43 million bpd (220.597 million tonnes) in 2007.

Read more: Upstream Online

The era of cheap gas is coming to an end, Russia's Prime Minister Vladimir Putin has told ministers from the world's major gas-exporting countries. The Gas Exporting Countries Forum (GECF) meeting in Moscow has agreed a charter and plans for a permanent base. "A new organisation has been born today, said Russian Energy Minister Sergei Shmatko.

Mr Putin said the cost of extracting gas was rising sharply, therefore "the era of cheap energy resources, of cheap gas, is of course coming to an end".

Read more: BBC

Global oil output could peak by 2020 - much earlier than expected - amid a collapse in investment due to the financial crisis, the International Energy Agency's (IEA) chief economist Fatih Birol claimed.

In an interview published today Birol told London-based newspaper the Guardian that conventional crude output could plateau in 2020, a development that was "not good news" for a world still heavily dependent on petroleum.

The IEA has never before been specific about the point at which conventional oil would peak, although last month it said total crude output could peak in 2030.

Birol's comments follow other signs that the IEA is rapidly changing its view. In its 2007 World Energy Outlook, the IEA predicted a rate of decline from the world's existing oilfields at 3.7%, only to admit 12 months later that the speed of the fall was more likely 6.7%.

Read more: Upstream Online or The Guardian

The world faces a crude supply shock if oil prices remain below $70 per barrel, Qatar's Energy Minister Abdullah Bin Hamad Al Attiyah said on Wednesday arguing that lower prices would discourage investment in new capacity.

A price of $70 per barrel is needed "to avoid any (supply) shock in the future," he said, explaining that this price level should be sufficient to encourage companies and oil producers to continue investing in capacity expansion projects. "Below $70, it will be non-economical to invest in the hydrocarbon sector," Al Attiyah told the Gulf Petrochemical and Chemical Association (GPCA) forum. "Today there is no cheap oil" he added.

Now that the price has fallen dramatically to below $50, this could discourage investment in finding new deposits and extracting them from difficult places. Countries and oil companies may postpone many upstream projects if they do not get a return on their investments.

"So this is our concern that when the economic crisis is over and demand starts (to pick up) again, then the world will face a big shortage of supply," Al Attiyah said.

World oil demand growth will return in 2009 after shrinking this year for the first time since 1983 due to the global economic slowdown, the International Energy Agency (IEA) said today.

The IEA's view is in stark contrast to the US Energy Information Administration, which on Tuesday said demand is expected to shrink by 450,000 barrels per day in 2009 following a predicted 50,000 barrel decline in 2008.

"Our working scenario rests on assumed resilience outside of the Organisation for Economic Co-operation & Development (OECD) regions, albeit with slower growth than in the past five years," the IEA said in its monthly report.

Read more: Upstream Online

The price of oil has fallen too far in response to a decline in world demand for fuel, International Energy Agency (IEA) chief Nobuo Tanaka said.

"Sometimes the market is overshooting upwards and downwards, and this time this is definitely happening downwards," Tanaka, the IEA's executive director, told Reuters.

He did not say where oil prices should be.

The world's top oil exporter Saudi Arabia said on Saturday crude at $75 a barrel was "fair". Saudi Oil Minister Ali al-Naimi later said that oil at that level would encourage new output from marginal, higher cost-sources.

Tanaka also urged producing countries and international oil companies to pursue their planned projects to avoid a supply crunch in the mid-term when demand in recession-hit nations recovers.

Oil at current levels of about $46 a barrel should not deter Opec countries from developing new oilfields, Tanaka said.

Read more: Upstream Online

Opec is ready to cut production by a significant amount when it meets later this month in Algeria, prompted by high oil inventories, the group's secretary-general Abdullah al-Badri said today.

"We are all geared towards a cut in Algeria," Reuters quoted Badri telling a news conference in Tehran, two days after the Opec decided at a meeting in Cairo to delay a decision on a new supply reduction.
Badri said he believed an oil price of $75 per barrel would be "reasonable", echoing comments by Saudi Arabia, the world's largest crude exporter.

Saudi Arabia on Saturday cited $75 a barrel as a "fair price" for oil in order to keep the more expensive new projects at the margins of world supply on track.

Read more: Upstream Online

US oil independence "is non-applicable" despite US President-elect Barrak Obama's assurances, said former Saudi Chief of Intelligence Prince Turki Al-Faisal Wednesday evening.

Al-Faisal said in statements to KUNA, during a seminar held on Saudi-US relations organized by the Arab contemporary studies center in Georgetown University, "Saudi should not be worried concerning Obama's attempts to launch oil independence, as oil remains the cheapest source of power, therefore it cannot be made indispensable." He added that the US call for independence in the field of energy was also on Bill Clinton's agenda, but the US continued to buy oil.

He noted that the US did not only import oil from the Middle East, but also from Canada and Mexico, therefore the issue was not limited to Saudi alone but to the US neighbors. The prince said that Saudi was near the end of the oil era, as it was investing in human resources through sending its students abroad to gain experiences and knowledge.

Read more: Kuwait News Agency

The World Energy Outlook 2008 (WEO2008) was released last week and it contains updated studies and forecast from the International Energy Agency (IEA). One of their conclusions is that six new Saudi-Arabias is required until 2030, corresponding to 64 million barrels per day, in order to meet demand and counter decline. Also they see increasing average decline rates of world oil production, mostly due to a switch to smaller fields as the old giants mature. This report signalize that IEA begin to see more and more challenges with future oil supply.

Some of the key graphs from WEO2008 can be found here:
http://www.worldenergyoutlook.org/key_graphs_08/WEO_2008_Key_Graphs.pdf

Comments and discussions related to WEO2008 can be found here:
http://www.theoildrum.com/node/4763