By Reza Amanat, Dow Jones Newswires

Source:

October 12, 2010

LONDON (Dow Jones)–Sanctions on Iran’s energy sector will hinder the goal of energy security and price stability, as the Islamic republic is deprived of much-needed investment in its oil and gas sector to achieve production growth, the head of the International Energy Agency said Tuesday.

“Iran has huge potential but they need investment…the sanctions are impacting on the necessary investment into Iran for future capacity increase,” Nobuo Tanaka, executive director of the Paris-based energy watchdog, told reporters on the sidelines of the Oil & Money conference in London.

Along with energy security, the issue of nuclear non-prolifaration is hugely important for global security and the two issues should be balanced, Tanaka added.

Tanaka also outlined possible “game changers” that the energy industry is likely to encounter in the coming years, adding that uncertainty over China’s ability to maintain its economic and energy demand growth was the main challenge.

Expectations of a massive expansion in Iraq’s oil production will also be key in the future. Although the head of the International Energy Agency said oil supply from Iraq is unlikely to have a major effect in the short and medium-term, by 2030 and 2035 the country could potentially increase its output by “two or three times,” he added.

Climate change and the challenge of delivering a 50% cut in global emission by 2050, as well as the growth in the production of electrical cars will also be possible game changers for the energy industry, he said.

According to IEA estimates, there will be about 9 million electrical vehicles on the road by 2020, which would have a huge impact on reducing emission and curtailing oil demand, Tanaka said.

However, he cautioned that in order to achieve a 50% reduction in global emissions by 2050, one billion electrical vehicles would have to be on the road, accounting for half of the global car fleet.