The Organization of the Petroleum Exporting Countries (OPEC) has released its annual report the World Oil Outlook 2018 (WOO) that makes forecasts for the oil industry up to 2040, analysing various indicators which are expected to impact the future energy market. These include, for example, population growth, size of working-age population and immigration, GDP growth, energy policies of the countries, etc.
The world’s population is projected to increase to 9.2 billion and the global economy is envisaged to more than double in 2040. Taking into consideration that strong growth is expected in developing countries, total primary energy demand is forecasted to grow from 274 million barrels of oil equivalent a day (mboe/d) in 2015 to 365 mboe/d in 2040. About 95% of the increase is expected in developing countries,with an average annual growth of 1.9% per year. The main driving forces behind this are China and India, accounting for 53% of energy demand in developing countries and around 33% of global demand by 2040.
The experts expect that global long-term demand for oil will increase by 14.5 million barrels per day (mb/d) and reach 111.7 mb/d in 2040. On average, it is a rather low growth rate of 0.6%, but still oil is going to remain the fuel with the largest share throughout the energy sector, as transportation and petrochemicals play a key role in shaping the oil demand. It is interesting to note that natural gas is projected as the fuel with the largest average demand growth (1.7% per year). The researches also point out that despite of the rapid development of renewables, oil, gas, and coal will still remain the dominant energy sources in 2040, with a share of more than 75%.
India is projected to see the largest additional oil demand (5.8 mb/d) and the fastest growth (3.7% p.a.) until 2040. Despite this rapid growth and a predicted 10 mb/d at the end of the forecast period, its total demand will still be considerably below the level of China.
Another factor responsible for the rise in oil consumption is the global vehicle stock that is projected to more than double, reaching 2.4 billion by 2040. This process is estimated to be led by China and other countries in Asia. Strong growth is also expected for petrochemicals where demand is projected to increase by 4.5 mb/d till 2040.
According to the WOO-2018, light products will satisfy more than half of the incremental oil demand over the forecast period, accounting for 7.8 mb/d out of a total demand growth of 14.5 mb/d. Demand for ethane/LPG is set to increase by 3.3 mb/d, which is the largest increase amongst all major products. The need for middle distillates is estimated to increase by5.4 mb/d, which will be almost equally divided between gasoil/diesel and jet/kerosene. Heavy products are also projected to experience increased demand (+1.2 mb/d).