‘Global oil output at peak, set to fall 32% by 2020’

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July 10: The world oil production is at its peak and is set to fall 32% by 2020 as discoveries wane, said Ali Samsam Bakhtiari, a former executive of Iran’s state oil company. World production is now about 81 million barrel a day, about 3.8 million less than the International Energy Agency’s estimate for the first quarter, Bakhtiari, who publishes papers and lectures on the theory that global oil production is on the verge of imminent decline, said on Monday in Sydney.

Oil prices that have risen almost three-fold in three years to an all-time high of $75.78 a barrel in New York on July 7 haven’t reduced demand significantly, Bakhtiari said, predicting further gains beyond $100.

"We don’t know how far the price has to go for demand to begin to be dented; the normal economics don’t work any more,’’ he said at a lecture in Sydney, hosted by the Financial Services Institute of Australasia. "Is it $125, is it $150? I don’t know. I don’t think it can go much higher than $300."

The so-called "peak oil" theorists argue that world oil supplies are running out faster than some analysts have estimated. Matthew Simmons, chairman of energy investment bank Simmons & Co. wrote in his book "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy," that output from Saudi fields is about to decline because water injection has damaged reservoirs. "I can see the peak very easily," Bakhtiari said. "In the short-term future production can only decline. It will not go up again because there’s faster depletion in all these fields than new fields coming on stream."

The Organization of Petroleum Exporting Countries has a maximum production capacity of 31 million barrel a day, while non-OPEC countries have a maximum of 50 million, Bakhtiari said. "Neither of these two entities can today go above these capacity figures," he said.

Saudi Arabia, which produces about 9 million barrel a day, is "struggling" to keep up production, particularly at the Ghawar field, the world’s largest, Bakhtiari said. Kuwait’s Burgan field, Mexico’s Cantarell field and the North Sea fields are already in decline, he said. Russia’s production probably already peaked in September 2004, he said.

Oil producers, including Russia, are overstating their output. The last "super-giant" oil field to be found was seven years ago in Kazakhstan, Bakhtiari said.