There’s a trend I’ve noticed in my neighbourhood restaurants. Increasingly, their menus proudly proclaim that the food on offer is ‘locally sourced’. Since I live in central London, where farms and fisheries are few and far between, I’m a bit sceptical about some of these claims. But the principle certainly makes sense.
Although, as an economist by training, I’m all in favour of global trade, buying locally certainly has its appeal. The less goods travel, the more you save on transport. The more local your purchase, the more you’re contributing to your neighbourhood economy. And there’s also the intangible quality of trust. It’s human nature to have faith in the suppliers who are closest to you.
Much of what applies to local artisanal yoghurt and micro-brewed beer is also true about more basic commodities – including oil and gas.
The global importance of regional oil and gas has become an obsession of mine over the past few months as I’ve worked on a new IOGP report focusing on production around the world.
The report, based on the most recent BP Statistical Review of World Energy, provides new insights into supplies of oil and gas around the world.
A unique feature of our report is the new IOGP Production Indicator© (PI) that shows the level at which a region is able to meet its able to meet its own oil or gas demand. A PI higher than 100% means the region produces more than it needs and so can export. A PI lower than 100% signifies the need for imports to meet regional demand.
When looking at a range of PIs, it became apparent that the seven regions covered can be divided into three groups. The net exporters are Africa, the CIS and the Middle East. Regions currently benefiting from self-sufficiency are Central & South America and North America. That leaves Europe and Asia Pacific, which are producing only a fraction of the oil and gas they need so must rely on imports.
Here’s a table that summarizes the situation:
|Production Indicator||Africa||CIS||Middle East||Central & South America||North America||Europe||Asia Pacific|
But the table shows only a moment in time.
As demand continues to grow almost everywhere, and existing fields deplete at an average of 6% per year, the situation is constantly changing.
For example, as Africa becomes more prosperous, what will happen as it uses more of the oil and gas it currently exports? How long will the Americas’ be able to count on their finally balanced self-sufficiency in oil? And what implications do these factors have on the importing regions of Europe and Asia Pacific?
For me, there’s one answer to all of these questions: significant investment in existing and new oil and gas fields around the world.
But, almost inevitably, that answer raises other questions:
- About the policies that need to be in place – regionally and locally – to encourage essential investment
- About the need for enabling infrastructure to deliver the benefits of oil and gas more widely
- And about ways to meet greater demand for oil and gas within the context of a global economy with lower greenhouse gas emissions.
Questions lead to dialogue. And getting back to where we started, the best place to begin that dialogue is locally. In your patch. The place you know and trust; engaging family, friends and neighbours and your local and regional representatives.
Our new report should help to stimulate informed debate.
What do you think?
Let me know on email@example.com