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Oil Demand To Rise*


Oil Powers Expect Rise In Demand

Environmentalists Speak Out at Summit

By Michael Astor

Associated Press

Thursday, September 5, 2002; Page E02

RIO DE JANEIRO, Sept. 4 -- Worldwide demand for energy will soar in the next 50 years because of population growth and present challenges for the global oil industry, industry leaders gathered at the World Petroleum Congress agreed. But they and environmental groups at the conference differed on where those challenges lie.

ChevronTexaco Corp. chairman and chief executive David J. O'Reilly said the greatest demand for oil will come from the underdeveloped world.

"How do we enable these 3 billion people, mostly in the developing world, to have a standard of living that approaches the one that many of us now enjoy in the developed world?" he said. "It's a huge challenge."

O'Reilly told the 3,100 oil industry executives and government ministers at the four-day summit that they need to work together as partners to extract the finite oil reserves the world will require.

"Close to 75 percent of the world's oil reserves lie in just seven countries and more than two-thirds are controlled by national oil companies, with limited access for international companies," O'Reilly said.

He said state-owned oil companies need broader partnerships with international oil companies.

He cited his company's partnership with Brazil's Petroleo Brasileiro SA, or Petrobras, in a deep-water exploration project off Nigeria and the work of 10 oil companies and three governments on an oil pipeline spanning six nations in Central Asia leading to the Caspian Sea.

Fostering industry awareness of environmental and social themes, organizers invited nongovernmental organizations to participate in the summit for the first time.

Relegated to a hard-to-find corridor, many of those groups felt the industry was missing an opportunity.

"Society is demanding more investment in the environmental and social areas. This will require new policies or the companies run the risk of harming their image," said Heloisa Oliveira, a spokesman for Conservation International in Brazil.

Oliveira said that so far, there has been little interest from oil executives in visiting the stands set up to inform them of environmental opportunities.

Executives seemed more interested in forging partnerships between the industry and the governments of developing countries to extract the world's remaining oil reserves.

"Only a minor part of the natural gas supplies have been found and huge supplies are waiting to be developed around the world," said Diamel Eddine Kheme of Sonatrach, Algeria's state-owned oil company.

He said the demand for natural gas will grow faster than the demand for oil in the next 20 years.

"Supplying these demands is increasingly a formidable challenge," he said. His company plans to sell Algerian-produced natural gas in Europe.

With oil and natural gas supplying 90 percent of energy needs worldwide, the conference debate focused on better ways to provide consumers with cheap, reliable energy, particularly to the third of the global population said to be in "energy poverty."

The head of state-owned Petroleos de Venezuela, Ali Rodriguez Araque, said oil will continue to be "the energy of choice," and that means stepping up the search for new reserves.

"We can safely forecast that world oil demand will increase from the present level of 76 million barrels per day to over 91 million barrels a day in 2010," said Rodriguez, whose country has the biggest oil fields outside the Middle East.

Rodriguez said demand could exceed 120 million barrels a day by 2020, much of it supplied by the Organization of Petroleum Exporting Countries, which he headed last year.

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