IEA may revise (downward) energy investment slide fcst-report (renewables down 38% from 2008)

IEA may revise energy investment slide fcst-report

Mon May 25, 2009 2:43am EDT

WARSAW, May 25 (Reuters) - The International Energy Agency may revise downward its forecast of a 21-percent slide in global energy sector investment, its chief economist Fatih Birol was quoted on Monday as saying.

"Our calculations show that investments in 2009 will drop 21 percent from 2008, that is by $100 billion. I am even afraid we will have to make a downward correction of it this year," Birol told Rzeczpospolita daily in an interview.

Birol reiterated prices could surge back to the record highs of last year once the economy and energy demand recover and the supply lags due to insufficient capacity.

IEA has often warned investment is too low and may cause a supply crunch by around 2012. (Writing by Patryk Wasilewski)

IEA warns of slide in energy investment

Foresees 21% drop

By Alex Lawler, ReutersMay 21, 2009

The economic downturn is cutting investment in energy supply, raising the risk of higher prices in future that could hamper any recovery, the chief economist of the International Energy Agency said.

Fatih Birol, The IEA's advisor to 28 industrialized countries, said in an interview he expected oil and gas upstream investment to fall 21%, or about US$100-billion ($113.8-billion), in 2009 from 2008 due to the global recession.

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Spending on renewable energy, such as wind power, is falling even more rapidly than on oil and gas. The IEA expects renewables investment to slide 38% this year compared to last, Mr. Birol said.

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Not all agree with the IEA. The agency warned in 2007 of a supply crunch around 2012, a view that some analysts said was actually contributing to higher prices by putting a "fear premium" in the market.