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OPEC: China, India lead energy demand Organization’s 2018 World Oil Outlook says oil retains highest share in global energy mix through 2040; gas has largest growth Kristen Nelson Petroleum News
The Organization of the Petroleum Exporting Countries released its 2018 World Oil Outlook 2040 Sept. 23, laying out what the organization sees for the global economy and global energy.
The outlook projects that the global economy in 2040 will be more than double that of 2017, but with major regional shifts over the period. While Organization for Economic Cooperation and Development countries in the Americas accounted for 20 percent of global gross domestic product in 2017, followed by OECD Europe and China at 18 percent each, other Asia at 10 percent and India at 8 percent, by 2040 China’s GDP is expected to increase to 24 percent, while OECD America will drop to 15 percent and OECD Europe to 12 percent.
The global population, 7.55 billion in 2017, is projected to grow to 9.21 billion in 2040, an increase of 1.66 billion, with the rate of growth decelerating over the period and the population aging. Population growth will primarily be in the developing world - Africa, India and the Middle East, with much slower growth in the OEDC region.
Global GDP is expected to increase at an average annual rate of 3.4 percent, slightly lower, the outlook says, than its 2017 assumption, and with faster growth, 3.6 percent in the earlier period, 2017-23, slowing to 3.2 percent by 2030-40.
Energy demand The outlook says primary energy demand is expected to increase by 91 million barrels of oil equivalent per day between 2015 and 2040, reaching 365 million boe per day in 2040 in the outlook’s reference case from 274 million boe per day, averaging 1.2 percent growth per year.
Developing countries, including China and India, account for almost 95 percent of the increase, with an annual average growth of 1.9 percent.
“Primary energy demand in China and India is the most significant contributor to overall energy demand growth,” the outlook says. Developing countries are projected to see an increase in energy demand of almost 86 million boe per day between 2015 and 2040, with energy demand in India and China in this period projected to grow by 22 million boe and 21 million boe per day respectively, more than 50 percent of the energy demand growth in developing countries during the period.
Demand in the group of other developing countries - excluding China, India and OPEC - is expected to increase some 29 million boe per day in the period, with significant growth also expected in OPEC countries, increasing from 20 million boe to almost 33 million boe per day.
Natural gas has the largest estimated demand growth, increasing by almost 32 million boe per day between 2015 and 2040, with the share of natural gas in the energy mix accounting for 25 percent in 2040, up 3.3 percent from 2015.
Oil highest share The outlook says oil will retain the highest share in the global energy mix in the period, with a share of nearly 28 percent in 2040, with fossil fuels projected to remain the dominant component in the global energy mix at 75 percent, down 4 percent from 2015.
Global oil demand is projected to increase by 14.5 million bpd, up from 97.2 million bpd in 2017, reaching 111.7 million bpd in 2040, but with that growth decelerating over the outlook period.
Long-term demand is projected to decline in OECD, rise moderately and then flatten in Eurasia, and increase by more than 22 million bpd in developing countries, rising from 44.4 million bpd in 2017 to 66.6 million bpd in 2040. The largest additional oil demand and the fastest growth rate is expected in India, growing at 3.7 percent per year and with the largest additional demand of 5.8 million bpd, likely passing the 10 million bpd mark toward the end of the forecast period.
US tight oil growth The outlook says non-OPEC supply is projected to grow by 8.6 million bpd in the 2017-23 period, due to strong performance in U.S. tight oil production. Total non-OPEC liquids supply is expected to grow from 57.5 million bpd in 2017 to 66.1 million bpd in 2023, with 5.6 million or 65 percent in the U.S.
Non-OPEC supply is expected to peak in the late 2020s at just below 67 million bpd, as U.S. tight oil supply peaks, and then decline slowly to average 62.6 million bpd by 2040, “with modest growth in Kazakhstan, Canada and Brazil insufficient to offset natural decline in most other parts of the non-OPEC supply picture.” Global tight oil is expected to peak at a one-quarter share of non-OPEC supply.
The outlook says demand for OPEC crude will decline in the medium term, from 32.6 million bpd in 2017 to 31.6 million bpd in 2023 but recover to current levels after U.S. tight oil peaks, rising to nearly 40 million bpd by 2040.
Investment Required investment in all sectors of the oil industry will total almost $11 trillion up to 2040, the outlook says, with global upstream investments over 2018-40 estimated at $8.3 trillion, mostly in non-OPEC countries, where investment is estimated to average $350 billion per year, declining to some $280 billion as the crude supply declines.
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