IEA refutes criticism

IEA refutes criticism

Azerbaijan, Baku, Nov. 13 / Trend A. Badalova /

The International Energy Agency (IEA) refuted widespread criticism of its independence after a scandal this week in an e-mail to Trend , stating that such accusations are groundless.

A statement by a high-ranking IEA source incriminating the agency of deliberately overstating forecasts on world oil reserves caused much debate this week.

According to a source cited by the British newspaper the Guardian, the IEA intentionally overstates its estimates of oil reserves under U.S. pressure so as not to cause a panic on the market.

In its report "World Energy Survey 2009" published this week, the agency forecasts a global increase in oil production to 105 million bpd in 2010 compared to today's 83 million.

The accusations made toward the agency may not be baseless.

The U.S. initiated the establishment of the IEA after oil crisis in 1973-1974. The U.S. hoped to create an organization opposing OPEC.

The major purpose of the agency was to promote international cooperation in improving the global structure of energy and energy services demand and supply.

Today's revaluation of oil reserves is not the first such incident in world history.

A scandal occurred at the British-Dutch company RD / Shell five years ago, when it became known that the oil company's reserves were overstated by 20 percent.

The results of the scandal were disastrous, leading to the resignation of three top managers and Shell issuing monetary compensation to shareholders. Ultimately Shell reduced its preliminary assessment by nearly four billion barrels.

However, the current situation with the IEA may have more consequences. Annual reports on world power engineering issued by the agency are popular across the world. Thus, many countries use the IEA forecasts to develop their state strategies, especially the UK. Accusations against the agency could cause serious damage to its reputation as an independent organization.

Commenting on the source's statement in the Guardian, the IEA said all accusations against the agency are unfounded.

"We find these groundless allegations logically inconsistent. IEA analysis is independent and neutral. In fact, we have been warning for years that we need more investment to compensate for the decline in production at mature oil fields," an IEA official representative wrote Trend in an e-mail.

According to the IEA, decline rates could increase significantly from 6.7 percent today to 8.6 in 2030. Even if oil demand remains flat, another 45 million barrels of oil of gross new capacity will be needed to offset the decline, the agency representative said.

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