Market Report Series Oil 218 Analysis and Forecasts to 223 Columbia University Centre on Global Energy Policy, New York, May 22 nd 218
Robust global oil demand growth to 223 1.8 1.6 1.4 1.2 1..8.6.4.2. World oil demand growth (y-o-y change) 217 218 219 22 221 222 223 Rest of the world India China China and India account for almost half of world oil demand growth of 6.9.
Petrochemicals drive global oil demand growth to 223 Feedstock requirements for new steam crackers 7 kb/d 6 5 4 3 2 Naphtha Ethane 1 US China Russia Others Petrochemical feedstocks (ethane and naphtha) responsible for 25% of global oil demand growth
IMO 22 specs enormous implications for products mix Marine bunkers in OECD and major non-oecd countries 3 5 3 2 5 2 1 5 1 5 kb/d Volumes (kb/d) and Shares (%) 215 216 217 218 219 22 221 222 223 9% 8% 7% 6% 5% 4% 3% 2% 1% % 215 216 217 218 219 22 221 222 223 Bunker HS FO Marine gasoil Marine FO.5% % HSFO replaced by a new.5% fuel and gasoil. Gasoil availability is the main constraint.
China use of alternative fuels displacing oil 8, 7, 6, 5, 4, 3, 2, 1, 1 Vehicles Gasoline displacement 212 213 214 215 216 217 kb/d China NGVs China Evs Gasoline displaced (Right) 1 9 8 7 6 5 4 3 2 1 8 7 6 5 4 3 2 1 1 Vehicles Diesel displacement kb/d 4 212 213 214 215 216 217 LNG trucks Electric buses Diesel displaced (Right) 35 3 25 2 15 1 5 Growing switch in fleets to electric vehicle s, CNG, LNG
Oil industry needs to replace one North Sea each year. Output loss from post-peak conventional crude oil fields -1. OPEC -2. -3. Non-OPEC -4. -5. 21 211 212 213 214 215 216 217 Ageing oil fields lose more than 3 per year despite slowing decline rates.
Only limited uptick in global upstream spending Global oil and gas upstream capital spending 212-218 9 8 7 6 5 4 3 2 1 USD billion -25% -26% 212 213 214 215 216 217 218* *Preliminary based on selection of investment updates Producers spend more on short cycle supply, especially US LTO. Investments in conventional fields remain depressed, but some signs of renewed interest in offshore.
Booming non-opec supply in early years of forecast Changes in global oil supply capacity 217-223 4. 3. 2. 1.. -1. US Brazil Canada Iraq Iran Norway Colombia Indonesia China Mexico Angola Venezuela more than covers demand growth to 22. By 223, non-opec supply grows by 5.2. OPEC capacity rises only 1.2 due to Venezuelan collapse and limited increases elsewhere.
Supply growth front loaded & dominated by US & NGLs Global liquids capacity growth Global oil supply capacity growth 217-23 2.5 8 Biofuels 2. 1.5 1..5. 217 218 219 22 221 222 223 Non-OPEC OPEC 6 4 2-2 OPEC Non-OPEC Total Proc. gains Non-conv NGLs LTO Crude Global But will projects be brought forward? Projects sanctioned today tend to have shorter lead-time.
Higher oil prices unleash second wave of US supply 18 16 14 12 1 8 6 4 2 21 211 212 213 214 215 216 217 218 219 22 221 222 223 LTO Gulf of Mexico NGLs Alaska Other Total output reaches 17 by 223 and could be even higher if prices rise/bottlenecks ease.
US bottlenecks ease, export capacity more than doubles. Expected Texas pipeline deficit 5.1 US crude export capacity 4.6.1 4.1.2 3.6 3.1.3 2.6 2.1.4 217 218 219 22 221 222 223 1.6 217 218 219 22 221 222 223 New pipeline projects ease constraints. US export capacity rises to 4.9 by 223. Corpus Christi solidifies position as largest US export hub.
US oil enters global markets Low-sulphur and petchem feedstocks US LTO first wave Low-sulphur, low residue feedstocks US LTO second wave Refiners in Asia and Europe look for suitable crude oil to produce petrochemical feedstocks and low-sulphur fuels
China net crude oil imports double the US in 223 Net crude oil imports 1 8 6 4 US China India 2 23 25 27 29 211 213 215 217 219 221 223 Indian imports, too, surpass the US in 223 as shale growth reduces US import dependence.
Spare capacity cushion shrinks to lowest level since 27 4. Global Oil Market Balance 36. 32. 28. 24. 2. 27 28 29 21 211 212 213 214 215 216 217 218 219 22 221 222 223 OPEC Crude Capacity Call on OPEC Crude + Stock Ch. Supply/demand tighter at the end of the forecast
Conclusions Robust world oil demand growth to 223 petrochemicals key driver. Non-OPEC output growth exceeds demand increase through 22. US, Brazil, Canada, Norway dominate growth. New infrastructure investments relieve US export bottlenecks. US crude finds new markets as refiners seek light, low sulphur crude to meet petrochemical demand and IMO specifications. More upstream investment needed today to meet future demand and offset 3 of declines from mature oil fields each year. As spare capacity cushion shrinks, supply security concerns remain critical.