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Thursday, December 14, 2017

Global energy trends good news for tanker owners with one third of long term oil/gas supply increases slated from the Middle East

The projections of the new International Energy Agency (IEA) Global Energy Trends are relatively good news for tanker owners.

 

Global primary energy demand in the Reference Scenario is projected to increase by 53% between 2004 and 2030 – an average annual rate of 1.6%. Over 70% of this increase will come from the developing countries. Globally, fossil fuels will remain the dominant source of energy, accounting for 83% of the overall increase. The share of gas increases, the share of oil drops from 35% to 33%.

 

World primary energy demand in IEA's reference case:

Energy source

1980

2004

2010

2015

2030

2004-2030

Coal

1,785

2,773

3,354

3,666

4,441

1.8%

Oil

3,107

3,940

4,366

4,750

5,575

1.3%

Gas

1,237

2,302

2,686

3,017

3,869

2.0%

Nuclear

186

714

775

810

861

0.7%

Hydro

148

242

280

317

408

2.0%

Biomass and waste

765

1,176

1,283

1,375

1,645

1.3%

Other renewables

33

57

99

136

296

6.6%

Total

7,261

11,204

12,843

14,071

17,095

1.6%

 

 

OECD's share of energy demand drops from some 50% in 2004 to 40% in 2030, while China's share alone rises from 15% to 20%.

 

The IEA says that sufficient resources exist worldwide to permit the world's energy industry to expand capacity in order to meet the projected increases in demand through to 2030 for each form of energy.

 

The Middle East and North/West Africa are expected to meet much of the growth in world oil and gas demand over 2004-2030. Some 30%, or 9.7 mbd of the increased demand until 2030 (32.7 mbd), is expected to be supplied by Saudi Arabia (+5.5 mbd) and Iraq (+4.2 mbd). Venezuela and Brazil will also increase oil production. Conventional oil production is projected to decline in OECD North America and Europe.

 

Energy imports are forecast to increase. Total OECD imports are forecast to increase by 47% between 2004 and 2030. The Middle East will see the biggest increase in energy exports, while imports will grow most in developing Asia. Oil will remain the most traded fuel in both percentage and volume terms, and the traded oil share will increase from 48% in 2004 to 54% in 2030. 

Net oil imports by major regions (Mtoe*)

Region

2004

2015

2030

OECD

1,657

2,123

2,444

Transition economies

-345

-476

-46

Developing countries

-1,007

-1,168

-1,256

*Million tonnes oil equivalents 

 

One of the assumptions for IEA's reference case is that USD 4,266 bn will be invested until 2030 in oil supply infrastructure, of which USD 1,149 bn will be in the OECD region, USD 639 bn in the transition economies and USD 2,223 bn in the developing countries (of which 698 bn in the Middle East) plus 256 bn for inter-regional transport. (As a comparison some USD 210 bn is estimated to have been invested in oil tanker newbuildings in the last 22 years.)

 

Chinese oil production is projected to decline after 2015 from 3.7 mbd to 2.8 mbd in 2030. Russian crude oil production is expected to increase from 9.2 mbd in 2005 to 10.5 mbd in 2010, 10.6 mbd in 2010 and 11.1 mbd in 2030.

 

The decline in OECD production from 15.2 mbd in 2005 to 13.8 mbd in 2010 and 9.7 mbd in 2030 could be important to tanker demand. The decline is projected to be particularly strong in Europe, from 4.8 mbd in 2005 to 3.8 mbd in 2010, 2.9 mbd in 2015 and 1.5 in 2030. This decline, together with the slow increase in Russian oil production, may mean that Europe will have to import more long haul crude oil.

 

Non-conventional oil is expected to increase gradually from 1.4 mbd in 2005 to 7.4 mbd in 2030.

 

The tables for the main developments in oil supply and demand are available from the INTERTANKO office.

 

Contact: Erik Ranheim