The US shale gas and oil boom of recent years is "very profound, but sometimes taken out of proportion," International Energy Agency chief economist Fatih Birol said at the Flame conference in Amsterdam Tuesday.
Birol said that of the projected reduction in US oil imports from Tuesday to 2035, while 35% was expected to be the result of changes in oil supply, with more oil produced at home, and 8% from oil switching to gas, some 57% would be the result of demand-side policies.
"US oil imports are set to plummet due to increasing oil supplies and recently adopted policies to improve efficiency of cars and trucks," he said.
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Birol added that even as the US became a major oil producer, it was wrong to downplay the continued role of the Middle East.
US and Brazilian oil would step up until the mid-2020s, "but the Middle East is critical to the long-term oil outlook," Birol said.
Middle East oil would "continue to be indispensable" and "the right signals to invest must be sent," he said.
Birol also questioned the importance of an often-cited increase in US coal exports as a result of US shale gas freeing up coal formerly used in the country's power generation sector.
The US had made up only 7% of the increase in global steam coal since 2007, he said, against massive increases from Indonesia.
Moreover, the slowdown in Chinese demand growth compared with previous expectations had been more significant.
"China's move away from coal will have a much greater impact on global coal markets than the US shale gas revolution," Birol said.
Curbing of demand growth in China had 20 times the impact of the increase in US coal exports in 2012, he said.
Birol said the shale revolution had a "major impact," but that in global gas pricing, "large disparities between regions will persist."
He added that Europe needed to think hard about the competitiveness of its industry in such a climate.
"Europe's energy strategy needs to focus on competitiveness and energy security in addition to climate concerns," Birol said.
--Alex Froley, firstname.lastname@example.org
--Edited by Peter Lucas, email@example.com
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