Global oil demand is expected to rise annually by 1.2 million barrels per day (bpd), leading to a total demand of 102.3 million bpd by 2022 – an increase of 6.9 million bpd from 2016, the Organization of Petroleum Exporting Countries (OPEC) said in its latest World Oil Outlook.
OPEC’s latest estimates are 2.24 million bpd above its last year’s demand forecast for 2022.
The producer group’s long-term estimates on demand put oil at 111.1 million bpd by 2040; however, improved energy efficiency measures and tightening policies will lead to a slowdown in growth between 2035 and 2040, the report said.
“Among the visible long-term global energy policy trends is the increasing penetration of electric vehicles (EVs), the tightening of fuel emissions standards, and the desulphurization in the road transportation, marine and aviation sectors,” OPEC said.
Total energy demand is expected to rise 35 percent to 372 million barrels of oil equivalent per day in 2040, compared to 2015. A major part of the demand is likely to come from India and China, with both in the range of 22-23 million barrels of oil equivalent per day.
China will continue to be the largest oil consumer, adding 6 million bpd to reach 17.8 million bpd by 2040. India will see the second largest growth, adding 5.9 million bpd between 2016 and 2040.
OPEC said it expects faster growth in renewable energy, although oil and gas will continue to supply more than half of global energy needs by 2040.
“It (renewables) is estimated to have an average annual growth rate of 6.8 percent over the forecast period,” the report said. “Its share is expected to increase by 4 percentage points by 2040.”
Oil and coal are projected to grow at much lower rates of 0.6 percent and 0.4 percent per annum, respectively.
The share of fossil fuels in global energy mix is expected to decline, from 81 percent in 2015, to 80 percent by 2020 and 74 percent by 2040.
On the supply side, the cartel said non-OPEC output is forecast to grow in the medium-term, rising from 57 million bpd in 2016 to 62 million bpd in 2022. The growth, however, is projected to slowdown in the long-term, declining by 0.3 million bpd in the 2020–2040 period.
OPEC supply is expected to rise from 38.8 million bpd in 2016 to 40.4 million bpd in 2020 and to 50.9 million bpd by 2040, the report said.
Demand for OPEC crude is estimated to stay flat until 2025, after which it is expected to rise sharply as US tight oil hits its peak. “The call on OPEC crude production rises steadily, reaching 41.4 million bpd in 2040, or up 8.8 million bpd from 2016,” the report said.
In the refining segment, OPEC expects most of the new refining capacity expansion to be located in developing countries, led by the Asia-Pacific and Middle East regions.
Around half of the overall refining capacity (9.5 million bpd) is estimated to be added in the Asia-Pacific in the long-term, while new capacities in the Middle East are expected to total around 3.7 million bpd, or 20 percent of the total.
A total of nearly 7.6 million bpd of new refining capacity is likely to come online between 2017 and 2022, and 19.6 million bpd of new refining capacity is expected between 2017 and 2040, the report said.
OPEC said capacity closures will also be needed in the medium- and long-term in order to avoid falling refinery utilization rates.
A net closure level of 2.5 million bpd is estimated for the period 2017-2025, the report said, adding that most of the closures are expected in developed regions, led by Europe.
Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com
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