The world oil and gas demand will shift until 2023 to petrochemicals, and away from motor fuels gasoline and diesel - a major challenge to the crude industry, as gas will replace refineries for producing many petrochemicals, Reuters reported on Monday, citing the International Energy Agency’s (IEA) five-year outlook report.
Almost 25 percent of the projected growth in oil demand will be driven by demand for fertilizers, plastics and beauty products in the same period.
Demand for gasoline and diesel would rise by just 0.7 percent each, amid improved fuel efficiency standards.
Until 2023, global oil demand is expected to rise by 6.9 million barrel per day (mbpd), with petrochemical feedstocks - ethane and naphtha - driving 25 percent of this growth, or 1.7 mbpd.
"Ethane, liquefied petroleum gases and naphtha, pose a bigger threat to the refiners' market share than electric vehicles and gas-powered transportation combined," the IEA said, expecting refiners to see just 4.8 mbpd of the demand growth until 2023, missing out on 30 percent of it.
In total, the world is expected to add 1.4 mbpd in new petrochemical-producing steam crackers over the next five years, the Paris-based agency added.
Demand for ethane will expand at the fastest pace, rising by 885 mbpd followed by naphtha with growth of 495 Mbpd and LPG with growth of 40 mbpd, it forecast.
Partially as a result, the IEA warned that refinery additions totaling 7.7 mbpd would exceed growth in demand for refined products by some 3 mbpd in 2023.
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