BP says world oil demand to peak

By Alex Lawler

LONDON (Reuters) - World oil production may peak in the coming years, but it will be because of a decline in demand for petroleum rather than constraint on supply, a BP economist said on Wednesday.

The comments come in the wake of remarks from other industry officials who in recent months have questioned mainstream supply forecasts, suggesting a peak in output may be closer than the industry has previously admitted.

"I believe there is a realistic possibility that world oil production will peak within the next generation as a result of peaking demand," BP Special Economic Advisor Peter Davies told a meeting at parliament organised by a group of lawmakers looking into peak oil.

A rally in oil prices, which hit a record high above $100 a barrel earlier this month, is leading to growing interest in peak oil -- the view that supply has reached, or will soon reach, a high point and then fall.

London-based BP, the world's third-largest fully publicly traded oil company by market value, dismisses the view that there is a problem with the amount of oil left in the ground.

Statistics complied by BP show the world has proven oil reserves of 1.2 trillion barrels, enough to sustain current output for 40 years.

Rather, Davies said environmental regulations, including efforts to reduce greenhouse gas emissions, could cause consumers to move away from oil.

"I think we will run out of demand before we run out of supply," he said. "There's a distinct possibility that global oil consumption could peak as a result of climate policies."