Oil to see massive demand thrust through 2040: Opec

September 25, 2018

Oil is expected to remain the fuel with the largest share in the energy mix through 2040, said Opec in its World Oil Outlook 2018, raising the long-term oil demand upward for the second consecutive year, with demand at over 111.7 million barrels per day (mb/d) in 2040.

Total primary energy is set to expand by a robust 33 per cent between 2015 and 2040, driven predominantly by developing countries, which see almost 95 per cent of the overall energy demand growth, added the Opec outlook.

Natural gas witnesses the largest demand growth in absolute terms, and renewables the largest growth in percentage terms, it said.

The 2018 Opec World Oil Outlook (WOO) launched in Algiers, Algeria yesterday (September 23), offers a thorough review and assessment of the medium- and long-term prospects to 2040 for the global oil industry, as well as analysis of various sensitivities that have the potential to impact the petroleum industry in the years ahead.

In launching the WOO, Mohammad Sanusi Barkindo, Opec secretary general said that the past year had been a historic one for the Organization, as well as the global oil industry, with the historic ‘Declaration of Cooperation’ “helping accelerate the return of balance to the global oil market, bringing more optimism to the industry, which in turn, has had a positive effect in the global economy and trade worldwide.”

He added that “the importance of these recent developments, specifically in terms of helping achieve sustainable market stability, is clearly vital across all timeframes,” which is evidenced in the analysis provided in the WOO 2018.

This year’s publication, the 12th edition, presented by Dr Ayed Al Qahtani, director of research Division, Opec, highlights the industry’s various linkages, and considers developments in areas such as the global economy, energy demand, oil supply and demand, both in the upstream and downstream, policy and technology developments, and environment and sustainable development concerns. This all helps provide the framework for the WOO’s Reference Case, including breakdowns by region, sector and timeframe.

The year’s WOO launch, alongside the 10th Meeting of the Joint Ministerial Monitoring Committee (JMMC), is part of the celebrations of the 2nd Anniversary of the seminal Algiers meeting (the 170th (Extraordinary) Meeting of the Opec Conference) that took place on 28 September, 2016.

Some specific highlights from this year’s WOO include:

• All forms of energies will be required in the future; it is not about choosing one form of energy over another.

• Demand growth is driven by non-OECD regions, which see a huge increase of around 23 mb/d to 2040.

• There is no expectation for peak oil demand over the forecast period to 2040.

• Long-term demand growth comes mainly from the petrochemicals (4.5 mb/d), road transportation (4.1 mb/d) and aviation (2.7 mb/d) sectors;

• The total vehicle fleet – including passenger and commercial vehicles – is projected to increase to around 2.4 billion in 2040.

• The majority of the growth continues to be for conventional vehicles, but the long-term share of electric vehicles in the total fleet is projected to expand and reach a level of around 13 per cent in 2040, supported by falling battery costs and policy support.

• Non-Opec liquids supply is forecast to increase by more than 9 mb/d between 2017 and 2027, with the major driver being US tight oil, but beyond this period non-Opec supply is set to decline by around 4 mb/d.

• The demand for Opec crude is projected to increase to around 40 mb/d in 2040, up from 32 mb/d in 2018.

• The share of Opec crude in the global oil supply is estimated to increase from 34 per cent in 2017 to 36 per cent in 2040.

• Global refinery additions are projected mainly in developing regions, led by the Asia-Pacific and the Middle East, but also Africa and Latin America.

• Fast evolving trade patterns for crude oil and refined products will continue to evolve, driven initially by additional flows from the US & Canada, and in the long-term by the Middle East, mostly attributed to increasing imports to the Asia-Pacific.

• In the period to 2040, the required global oil sector investment is estimated at $11 trillion.

• Opec remains fully engaged and supportive of the Paris Agreement on climate change, and it is vital that we collectively develop and adopt technologies, as well as all-inclusive energy policies, that transform the environmental credentials of all energies.

• Energy poverty remains a major global challenge, with almost one billion people still without access to electricity and three billion lacking access to clean fuels for cooking.