ABUJA (Sundiata Post) – Global energy demand is expected to increase by around 30 percent by 2035, an average growth of 1.3 percent yearly, driven by increasing prosperity in developing countries, partially offset by rapid gains in energy efficiency, the 2017 edition of BP Energy Outlook stated.
“The global energy landscape is changing,” said Bob Dudley, BP Group Chief Executive. “Traditional centres of demand are being overtaken by fast-growing emerging markets. The energy mix is shifting, driven by technological improvements and environmental concerns. More than ever, our industry needs to adapt to meet those changing energy needs.”
While non-fossil fuels are expected to account for half of the growth in energy supplies over the next 20 years, the outlook projects that oil and gas, together with coal, will remain the main source of energy powering the world economy, accounting for more than 75 percent of total energy supply in 2035, compared with 86 percent in 2015.
According to the outlook, oil demand grows at an average rate of 0.7 percent yearly, although this is expected to slow gradually over the period. The transport sector continues to consume most of the world’s oil with its share of global demand remaining close to 60 percent in 2035. However, non-combusted use of oil, particularly in petrochemicals, takes over as the main source of growth for oil demand by the early 2030s.
“The possibility that the most important source of growth in oil demand in the 2030s won’t be to power cars or trucks or planes, but rather used as an input into other products, such as plastics and fabrics, is quite a change from the past,” said Spencer Dale, BP’s group chief economist.
The transport sector accounts for around two thirds of the growth in oil demand. Within that, oil demand for cars increases by around 4 million barrels daily, underpinned by a doubling in the global car fleet. The number of electric cars is assumed to increase from 1.2 million in 2015 to around 100 million in 2035, around 5 percent of the global car fleet.
The outlook constructs two illustrative scenarios to consider the impact of the broader mobility revolution affecting the car market, including autonomous cars, car sharing, and ride-pooling.
“The impact of electric cars, together with other aspects of the mobility revolution, such as self-driving cars, car sharing, and ride pooling, is one of the key uncertainties surrounding the long-term outlook for oil” said Dale.
The slowing rate of oil demand growth is contrasted by the abundance of global oil resources. The outlook predicted that the abundance of oil may cause low-cost producers, such as Middle East Organisation of Petroleum Exporting Countries, Russia, and the US, to use their competitive advantage to increase their market share at the expense of higher-cost producers.
The outlook also forecasts that all of the demand growth for oil in the period to 2035 comes from emerging markets, with China accounting for half.
According to the outlook, gas grows more quickly than either oil or coal, with demand growing an average 1.6 percent yearly. Its share of primary energy overtakes coal to be the second-largest fuel source by 2035.
It further stated that the main growth comes from China, Middle East, and the US. For example, in China, growth in gas consumption outstrips domestic production, so that by 2035 imported gas comprises nearly 40 percent of total consumption, up from 30 percent in 2015. It also stated that in Europe, the share of imports rises from around 50 percent in 2015 to more than 80 percent by 2035.
Shale gas production accounts for two thirds of the increase in gas supplies, led by growth in the US. LNG growth, driven by increasing supplies in Australia and the US, is expected to lead to a globally integrated gas market anchored by US gas prices.
The outlook stated that LNG would grow rapidly to account for more than half of traded gas by 2035. This increase is led by supplies from the US, Australia, and Africa. Around a third of this growth occurs over the next 4 years as series of projects currently under development come on-stream, it added.