(Source) Oil prices are likely to remain low over the next five years because of plentiful supply and falling demand in developed countries, the International Energy Agency said Tuesday in its annual forecast.
The Paris-based body, which advises developed countries on energy policy, says it expects oil prices to return to $80 per barrel in 2020, with further increases after that.
Oil prices are down more than 50 per cent since the middle of last year. On Tuesday, the U.S. crude oil contract closed up 26 cents at $44.13 US a barrel.
In its World Energy Outlook, IEA warned members not to become complacent about low cost oil from a handful of producers as that could be a threat to energy security.
And it urged countries to move more quickly towards reducing greenhouse gas emissions.
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The Kitimat LNG project was somewhat in doubt when Apache announced its desire to sell their interest, but now has new lease on life, as Apache sells its stake in the project to Woodside Petroleum for $2.75 billion USD. Apache will also get an additional $1 billion to reimburse its net expenditure in the Wheatstone and Kitimat LNG projects between June 30, 2014, and the close of the deal, which is expected to be sometime in the first quarter of 2015. See Apache press release here.
The Provincial Government of British Columbia has bet heavily on building a robust LNG industry and can ill afford to lose momentum. Despite recent weak energy prices a secondary market for Canada’s natural gas is critical to the long term health of the industry in Canada. Currently, Canada only has one customer in the United States with an extensive pipeline network running south. Like Canadian oil, when you only have one customer the customer can dictate the terms and conditions. Having a LNG export facility and oil export facility offers Canadian natural gas and oil to a global market. When you have more then one customer, you have an auction.
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