Developing countries stand as the main drivers of the global oil and gas forecast
General Secretary of the Organisation of Petroleum Exporting Countries (OPEC) Mohammed Barkindo, has disclosed that at the global level, oil related investment is required to cover the future demand for oil over the forecast period of 2016–2040 which is estimated at almost $10 trillion.
He stated this in his key note address titled “The Global Oil and Gas Outlook- Market and OPEC forecast,” at the ongoing Nigeria Oil and Gas exhibition Conference on Tuesday in Abuja, with the theme: “A Journey Towards Transformation.”
Barkindo expressed his delight concerning oil prices stabilizing at the global market due to the historic deal made in 2016, adding that in January 2017, oil price was at $52 as the OPEC basket price.
He noted that oil and gas are expected to supply around 53% of the global energy demand by 2040, stating that total primary energy demand is set to increase by 40% reaching about 3.82 million barrel per day by 2040.
“The outlook for the long-term global economic growth rate to 2040 is at 3.5% per annum, and the medium-term oil demand is revised upward by 1 million barrels a day rising above 99mbpd by 2021”. Barkindo said.
He added that “long-term oil demand is revised slightly downwards by 0.4 mbpd, with total demand at over 109 mbpd by 2040, also that developing countries will continue to lead demand growth, increasing by close to 25 mbpd, to reach over 66 mbpd by 2040.”
Continuing Barkindo also stated that the long-term demand growth comes mainly from the road transportation (6.2 mbpd), petrochemicals (3.4 mbpd) and aviation (2.8 mbpd) sectors, stating that oil demand in the road transportation sector is driven by the increasing car fleet in developing countries and declining oil use per vehicle in the OECD region.
Furthermore, he also stated that the Non-OPEC liquids supply is expected to drop from close to 57 mbpd just below 56 mbpd in 2017, before recovering slowly to just over 58.5 mbpd in 2021.
“In the long-term, non-OPEC liquids output is anticipated to see a slow rise to just under 61.5 mbpd by 2027, before dropping to just under 59 mbpd by 2040”, he said.
Nevertheless Barkindo also stated that new refining capacity will continue to follow demand growth to developing regions, which will be led by the Asia-Pacific, projected to add 9.5 mbpd by 2040.
“Capacity rationalization remains a long-term requirement, with some 2.5 mbpd of net refinery closures expected by 2040, an estimated 4 mbpd by 2025, and a further 5 mbpd are indicated as needed by 2040 if refining regions are to maintain utilization rates of at least 80%” Barkindo said.
While expressing his gratidue towards President Buhari -led administration for their immense support at the global level, he stated that the future tightening of climate change policies will likely lead to reduced energy demand and a further shift in the energy mix towards renewables in years to come.