IEA sees oil above $100 and recognises supply limit

By Barbara Lewis and Alex Lawler

LONDON (Reuters) - The world will have to live with the risk of an energy supply crunch and an oil price well above $100 a barrel in the years to come, the International Energy Agency (IEA) said on Thursday.

Massive investment of more than $26 trillion (16.4 trillion pounds) will be needed in the next 20 years to offset the impact of falling supply at ageing oilfields and ensure the world has enough energy, the IEA said.

"There remains a real risk that under-investment will cause an oil supply crunch (by 2015)," the IEA said in an executive summary of the WEO to be released in full next week.

"The gap now evident between what is currently being built and what will be needed to keep pace with demand is set to widen sharply after 2010."

The emphasis on investing enough for supply to meet demand has been a recurrent theme in the IEA's annual World Energy Outlook's (WEO).

The 2008 version shifts the focus to dwindling reserves.

It looked at 800 of the world's oilfields and found the average rate of decline was 6.7 percent for those that have passed their production peak. It expects that rate to increase to 8.6 percent in 2030.

Total world oil production is not expected to peak before 2030, but the more easily accessible sources of crude, or conventional oil, are expected to plateau towards the end of the projection period.