Member countries direct IEA to investigate cooperation with non-members on strategic oil stocks

Ministers from member countries called for the International Energy Agency to investigate cooperation with non-members on strategic oil stocks, in a communique released after the IEA's 2024 ministerial meeting in Paris on Feb. 13-14

The move comes despite IEA forecasts that supply growth in the US, Canada, Brazil and Guyana will outweigh oil demand growth of around 1.2 million b/d in 2024.

"Given that participation of non-members into the IEA collective actions would benefit and contribute to future-proofing the system and to strengthening global oil security, we direct the Secretariat to investigate the possibility, advisability and feasibility of such participation," the ministers said.

Ministers said they encouraged non-members to consider holding and maintaining emergency stocks.

The IEA said previously that any extreme weather in the Americas or escalation of the conflict in the Middle East in 2024 could see supply security deteriorate and necessitate IEA intervention.

IEA Executive Director Fatih Birol refuted that the IEA has criticized OPEC for its production cut policy, but warned of the consequences of policies that increase prices.

"We have only mentioned that if the oil prices continue to go up and if we take steps to push the prices up, it may well provide upward pressure, inflationary pressures and this may in turn create challenges for the already fragile global economic growth," he said.

Oil prices have seen some growth in recent weeks. Platts, part of S&P Global Commodity Insights assessed Dated Brent at $86.00/b on Feb. 13, up from $83.315 on Feb.1.

The IEA is also targeting global expansion after Latvia became a member during the ministerial meeting.

The IEA has launched talks with India over membership and is establishing an office in Singapore. Eyeing further expansion, the IEA approved Costa Rica becoming an accession country during the meeting, and added Kenya and Senegal as association countries.

No new projects

In the communique, the ministers acknowledged the IEA's Net Zero Roadmap report.

They said it was important that "no new unabated coal power" plant should be built, and noted that "in a scenario that hits global net zero emissions by 2050, declines in demand are sufficiently steep that no new long lead-time conventional oil and gas projects are required."

The inclusion of these lines on new unabated coal power and long lead-time conventional oil and gas projects in the ministerial communique is significant because the IEA represents more than 80% of global energy demand.

Birol said that depending on the project, long-lead times are on average 7-8 years. "Whether or not the world will need in 7-8 years' time substantial new oil production is a key question," he said.

During a session earlier in the day, Irish Minister for Environment, Climate and Communications Eamon Ryan said that members of IEA see no need to develop new unabated coal or long-lead time conventional oil and gas projects if they are to live up to the commitment to transition away from fossil fuels.

"That is a historic shift in my mind," said Ryan, who was co-chair of the 2024 IEA ministerial meeting.

The IEA estimates the world needs to invest $4.5 trillion/year in energy transition by 2030.

Ryan said $2.2 trillion-2.8 trillion of that should be spent in emerging markets, where it is difficult to secure financing.

Gas security

The communique also confirmed that ministers adopted measures to bolster the IEA's gas security role. It recognized the agency's work to help countries assess and mitigate the impacts of supply disruptions, which may lead to price peaks and harmful volatility, and diversify gas supplies through regular market monitoring and recommendations.

"We further recognize the importance of well-functioning global LNG markets and gas storage and reserve mechanisms and regulatory frameworks, where appropriate," the ministers said.

"In this context, we request the IEA Governing Board, at official level, through appropriate bodies, to exchange information, explore and analyze ways to enhance flexibility, transparency, and security of supply, such as through enhanced gas storage and reserve mechanisms," they said.

Concerns about stable gas supply increased significantly in 2022 after Russia invaded Ukraine. Russia was a major pipeline gas supplier to Europe before the war started, but attacks on infrastructure and Russian counter sanctions led to the suspension of supplies to many countries, as well as major price hikes.

Emergency measures taken to mitigate the impact of Russian cut-offs, as well as milder weather, have eased some of the pressure on buyers to secure supply.