The world energy industry is expected to make massive investments over the next few years to replace aging equipment and increase production capacity, industry experts say.

Total projected expenditures are more than a trillion dollars and the vast costs pose the threat of increased interest rates and higher oil prices, they say."The amounts are truly staggering," said Patrick Connolly, senior consultant for energy finance at Cambridge Energy Research Associates.

"It's a whole process that's beginning, the recapitalization of an industry that's been very quiet for the past four or five years," Mr. Connolly said.

The oil industry must be retooled because comparatively little investment has been made since oil prices fell in the mid-1980s. Without new equipment, the industry may not be able to meet growing world energy demands.

The industry also will have to increase investments to comply with growing environmental demands.

For example, if Congress passes legislation requiring that oil tankers have double hulls to guard against spills like last year's Exxon Valdez spill in Alaska, it will add $45 a ton to the $300-a-ton cost of building a supertanker.

To replace an aging world oil tanker fleet, another $200 billion will be spent over the next decade, Mr. Connolly said.

"The average age of a very large crude carrier is 15 years," he said. Unless these ships are replaced, the frequency of large oil spills will increase, he said.

For the 390,000 gasoline stations in the United States to comply with regulations on tank leakage and air pollution, it will cost between $8 billion and $30 billion, Mr. Connolly said.

Coal-burning utilities are expected to invest $8.5 billion a year over the next five years to cut emissions that cause acid rain. Those investments will add 2 percent to 4 percent a year - and in some cases much more - to utility rates.

Mr. Connolly said the nation's oil industry alone is expected to make $183 billion in capital expenditures over the next four years, with about two- thirds of that going into exploration and production.

The world refining industry, already facing "imminent shortfalls," will spend $120 billion over the next four years to build new facilities and expand old ones, he said.

Many oil analysts and experts say the projected expansion echoes the period from 1977 to 1981, when the refining industry spent $31 billion a year. Since 1981, average annual refinery spending has fallen to about $18 billion a year.

OPEC nations are planning on spending heavily, too, because of expected demand for their oil. Subroto, OPEC secretary-general, said they will need as much as $60 billion over the next five years to increase daily production capacity from the current 27 million barrels a day to 33 million or 34 million b/d.

But all expansion needs pale in comparison with those of Asia's Pacific Rim nations.

Yasushi Kajiwara, managing director of the Industrial Bank of Japan, said that energy demand in the fast-growing Pacific region is expected to double during the next 15 years.

A staggering $654 billion will be needed to build the energy infrastructure necessary to meet demand, he said.

Some experts predict oil prices must rise steeply in the next decade to pay for the massive investments in energy.

But Mr. Subroto said he expects world oil prices to remain around $18 a barrel for at least five years.