That was the grim, inescapable conclusion Suleiman Jasir al-Herbish, the soft-spoken director-general of the Organization of Petroleum Exporting Countries' Fund for International Development, presented to the 41st Munich Conference on Security Policy this past weekend.

NATO defense ministers and security experts sat quietly as al-Herbish quietly racked up the ominous figures that they all already knew:

"Oil and gas are expected to account for two-thirds of global energy consumption by 2020," al-Herbish said.

"Oil demand increased by more than 75 percent, from 47 million barrels per day, or bpd, in 19 70 to 83 million bpd this year. Demand is forecast to rise further, by around 30 percent or 1.5 percent annually for the next two decades, and to reach 111 million bpd by 2025."

The development in natural gas deposits around the world will not ease global requirements for oil, al-Herbish said. Demand is projected to rise remorselessly in that sector as well, he said.

The OPEC fund chief projected the global demand for gas would grow by 2.9 percent annually, to 30 percent of global energy consumption by 2025. About 80 percent of the incremental increase in oil demand would be in the developing countries, which together would account for 46 percent of world oil consumption by 2025, he said.

Al-Herbish's cold figures defined the enormous dilemma facing global leaders in the first decades of the 21st century. Economic development in the poor, or developing, nations is absolutely essential to break the harsh cycles of pover ty amid soaring populations that have trapped them for so long.

But that same industrial development, by boosting overall demand for scarce non-renewable resources in the global marketplace, may threaten the prosperity and even the stability of the established industrialized nations themselves.

Al-Herbish also made clear that rising demand and prices were structural in nature. The enormous industrial development of China alone meant that one nation, the most populous in the world, would account for 25 percent of world oil consumption by 2025, he said.

Furthermore, there would be no alternative to the Middle East to provide the largest, highest quality and most easily accessible oil, al-Herbish said.

"As a seat for almost 70 percent of the world's proven oil reserves and 40 percent of total proven world gas reserves, the Middle East, home to the majority of OPEC member countries, will have to meet alm ost two-thirds of the projected increase in world demand," he told the Munich conference.

"Of a projected world oil trade of 67 million bpd by 2025, the Middle East will account for about half. This region's importance is also expected to increase, as far as the natural gas trade is concerned."

Keeping those reserves flowing will certainly need massive international investment, al-Herbish admitted. Iran's aging oil fields are expected by many international experts to require large amounts of gas to be pumped into many of them keep extraction flowing smoothly.

And Defense Secretary Donald Rumsfeld's personally picked analysts disastrously underestimated the huge investment in infrastructure that the Iraqi oil industry would need following the 2003 toppling of President Saddam Hussein.

"A cumulative total of some 500 billion will be needed over the next 25 years to maintain and increase the oil supply capacities of the Middle East - an ar ea of low-cost production," the OPEC fund director-general told the security conference.

However, he continued, "This amount is not substantial, when compared with expected Middle East oil revenues, and thus not considered as particularly demanding, provided that oil prices are not so low that they deprive the industry of the financial resources required for adequate investment."

Al-Herbish also pointedly noted that the major Middle East oil-producing nations would not be able to generate much of that half a trillion dollars to keep their oil flowing by themselves. It would be in their interests, he indicated, not to kill the goose that laid the golden eggs and to seek to destabilize or threaten the economic prospects of the industrial nations - the markets for their oil.

"Although national oil companies are making the necessary investments to bring production levels up to standard, part of the financing will have t o come in the form of foreign direct investment which, in turn, requires a peaceful and stable enabling environment in FDI home countries," he said.

Al-Herbish acknowledged the record levels that global oil prices had reached in 2004 and he suggested that part of that spike was due to short-term volatile factors that probably would not continue. Other dynamics, however, such as the growing demand from China's industrial economy, were structural and likely to remain or even grow for the foreseeable future.

"All commodities witnessed a sharp increase in price in 2004," he said. "For oil, in nominal terms, the OPEC daily basket price reached record highs in 2004. In real terms, however, prices are some 50 percent lower than they were in early 1980: In today's dollar terms, they are at the same level of late 1973, and below what they were in 1979."

"Prices moderated again in the fourth quarter, averaging $36 a barrel in De cember 2004," he added.

"A combination of factors contributed to the price volatility, which occurred despite sufficient supplies and sound market fundamentals," al-Herbish said.

"These include unusual and unexpected high demand, in particular from China, compounded by low global inventory levels, refining bottlenecks, and strained supply infrastructure in major consuming regions, war and geo-political tensions, and speculative activity in the paper markets."

He also cautioned that the spare oil producing capacity of the OPEC member nations "has fallen to around 5 percent of total OPEC capacity, following the decision by OPEC to increase production by a total of 3.5 million bpd in 2004."

Therefore, he added, "Other pressures, such as speculation and downstream bottlenecks, are likely to continue keeping prices high in the near future. In the longer term, these pressures need to be addressed in a broader cooperative app roach."

The news al-Herbish had to give the major industrialized nations was not all bad. He made clear the major OPEC governments were still prepared to play ball with them and were not seeking any joint confrontational approach.

But the raw figures he crunched told a grimmer tale: They served notice that the Panglossian optimism about ever-growing oil resources and alternative energy supplies that has fueled U.S. official policies and popular expectations over the past quarter century is out of touch with the new emerging reality.

International demand is going to outrun supply and the Middle East will remain the crucial global prize and, therefore, the dangerous cockpit of global power rivalries for decades to come. This Brave New World faces dark days.

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