News Code : 45397

 

Petrotahlil — The International Energy Agency published its latest World Energy Outlook on Oct. 13, containing closely watched, long-term forecasts for energy supply and demand to 2040.

Below are the main projections for the oil sector in the IEA's central 'Stated Policies' scenario.

Demand

  • After recovering from the "exceptional ferocity" for the COVID-19 crisis, world oil demand will rise from 97.9 million b/d in 2019 to 104.1 million b/d in 2040.
  • Compared to last year's report, oil demand is some 2 million b/d lower in 2030, when it stabilizes at just over 103 million b/d, and in 2040.
  • Under a "delayed recovery scenario", the recovery timeline is pushed back two years, delaying a full rebound and reducing long-term oil demand by a further 4 million b/d.
  • The IEA forecasts a net oil demand increase of around 50,000 b/d from behavior changes in 2030 as a result of the pandemic.
  • The outlook for biofuels demand in 2040 is raised by 380,000 b/d to 5.1 million b/d.
  • The IEA left its estimate for the number of electric cars on the roads in 2040 little changed at 330 million vehicles.

Supply

  • COVID-19 has heightened volatility in oil markets for the long term, undermining upstream investment and making management of the market by OPEC+ a "very delicate balancing act."
  • US shale is less able to act as a market "shock absorber," or balancer – for example taking up slack in times of demand weakness -- as investors and public opinion have turned against the sector and its poor financial returns.
  • Upstream oil and gas investment has fallen by a third globally this year, but by half in the US shale sector, posing supply risks in the event of a demand rebound.
  • OPEC+ will find it harder to judge its decisions in the absence of US shale, while the financial vulnerability of weaker members such as Iraq or Nigeria will make it harder for them to go along with collective production management.
  • Oil production in sub-Saharan Africa is unlikely to achieve 2019 levels any time in the period to 2040, and Africa's oil production drops by 1.5 million b/d in 2019-25, to 6.9 million b/d, in the Stated Policies Scenario.
  • In the Stated Policies Scenario, while there is only limited growth in oil demand after 2030, $390 billion in annual investment is still needed in upstream oil projects, mainly to offset output decline.

Refining

  • The IEA warns that, by 2030, some 14% of today's refining capacity in advanced economies faces the risk of lower utilization or closure.
  • Refinery throughputs to 2040 will grow at only half the pace seen in the last decade, as refineries are "further challenged by a structural shift in oil use away from transport fuels and towards petrochemical feedstock."
  • More than 6 million b/d of new capacity will come online from now to 2025, but demand will only grow by 2 million b/d during this period.
  • The IEA says the investment case for new refineries in Central and South America and Africa have "weakened considerably" as they face "fierce competition."

Key oil demand forecasts (million b/d)

  2019 2025 2030 2040 CAAGR (%) 2019-2040
North America 22.9 22.1 21.7 19.3 -0.8
United States 18.5 17.9 17.5 15.2 -0.9
Central and South America 5.4 5.6 5.7 6.2 0.6
Brazil 2.3 2.3 2.4 2.6 0.6
Europe 13.3 11.9 10.9 8.6 -2.0
European Union 10.0 8.6 7.6 5.6 -2.7
Africa 4.1 4.7 5.4 7.0 2.6
South Africa 0.6 0.7 0.7 0.8 1.4
Middle East 7.5 7.9 8.5 10.0 1.4
Eurasia 3.9 4.0 4.2 4.2 0.5
Russia 3.1 3.1 3.2 3.1 0.0
Asia Pacific 32.5 35.0 37.1 37.9 0.7
China 13.2 14.4 15.1 14.1 0.3
India 5.0 6.1 7.1 8.7 2.7
Japan 3.5 3.0 2.7 2.1 -2.3
Southeast Asia 5.2 6.0 6.5 7.1 1.5
International bunkers 8.4 8.8 9.7 10.9 1.3
OECD 42.7 40.0 38.3 32.8 -1.2
Non-OECD 46.8 51.1 55.3 60.5 1.2
Advanced economies 43.1 40.4 38.7 33.1 -1.2
Emerging market & developing economies 46.4 50.7 54.9 60.1 1.2
World oil 97.9 99.9 103.2 104.1 0.3
Road, aviation & shipping 54.9 56.2 58.6 58.8 0.3
Industry & petrochemicals 18.5 20.1 21.3 23.0 1.0
World biofuels 2.1 2.8 3.6 5.1 4.4
World liquids 100.0 102.8 106.8 109.2 0.4

Key oil supply forecasts (million b/d)

  2019 2025 2030 2040 CAAGR (%) 2019-2040
North America 24.7 27.7 28.9 27.3 0.5
Central and South America 6.3 7.3 7.9 9.3 1.8
Europe 3.5 3.8 3.0 2.1 -2.5
Africa 8.4 6.9 7.2 7.3 -0.7
Middle East 30.2 31.1 33.4 36.4 0.9
Eurasia 14.5 13.9 13.9 13.2 -0.5
Asia Pacific 7.7 6.7 6.4 5.8 -1.4
Non-OPEC production 60.5 63.1 64.1 61.8 0.1
OPEC production 34.9 34.4 36.5 39.5 0.6
World production 95.4 97.5 100.6 101.3 0.3
Processing gains 2.3 2.5 2.6 2.8 0.9
World supply 97.8 99.9 103.2 104.1 0.3

 

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