World petroleum and other liquid fuel consumption will increase 38% by 2040, spurred by increased demand in developing Asia and the Middle East, according to projections in International Energy Outlook 2014 (IEO2014), released by the US Energy Information Administration (EIA).
“The growth outlook for liquid fuels use will be largely driven by demand in the developing world, especially in Asia and the Middle East,” said EIA Administrator Adam Sieminski. “Those two regions combined account for 85% of the total increase in liquid fuels used worldwide over that period.”
World markets for petroleum and other liquid fuels have entered a period of dynamic change in both supply and demand. The changes in the overall market environment have led the EIA to reassess its outlook for long-term global liquid fuel markets in IEO2014.
Key IEO2014 findings include:
- World liquid fuel use is projected to grow from 87 million barrels per day (MMbbl/d) in 2010 to 119 MMbbl/d in 2040. The potential for growth in demand for liquid fuel is focused on the emerging economies of China, India and the Middle East, while liquid fuel demand in the US, Europe and other regions with well-established oil markets seems to have peaked.
- After a long period of sustained high oil prices, efficiency and fuel switching have reduced or slowed the growth of liquid fuel use among mature oil-consuming countries.
- Developing Asian countries (including China and India) account for 72% of the world increase in liquid fuel consumption, with Middle East accounting for another 13%.
- OPEC oil producers are the largest source of additional liquid fuel supply between 2010 and 2040. OPEC crude and lease condensate accounts for 14 MMbbl/d of the 33 MMbbl/d increase in total liquid fuel supply. The IEO2014 Reference case assumes OPEC producers invest in incremental production capacity that enables them to maintain a share of between 39% and 44% of total world liquid fuel production throughout the projection. Middle East OPEC member countries alone account for 90% of the total growth in projected OPEC crude and lease condensate production.
- Non-OPEC crude and lease condensate production increases by 10 MMbbl/d. Rising world oil prices attract investment in areas previously considered uneconomic.
Middle East scenario
Liquid fuel demand in the Middle East grows substantially in the IEO2014 Reference case, by 4.4 MMbbl/d from 2010 to 2040, as a result of strong population growth rates, second only to those in Africa, and rising incomes. Liquid-intensive industrial demand also plays a major role, with consumption in the chemical sector leading the growth of industrial demand.
Delays in petroleum subsidy reforms (outside of Iran) and strong growth of income per capita support significant expansion of transportation sector demand for liquid fuel in the region. In the later years of the projection, it is likely that some subsidy reform will occur, and the resulting higher prices will begin to slow the growth in demand for liquid fuel.
Demand for liquid fuel in the electric power sector declines from 2010 to 2040 in the Reference case, as many countries increasingly turn to lower-cost natural gas and, to a lesser extent, nuclear and renewable fuels, in an effort to increase the volume of petroleum available for export.
The timing of the shift from reliance on liquid fuel for power generation remains uncertain, however, as the region faces delays in improving infrastructure and there are limits on the supply of alternative fuels for power generation. For instance, Saudi Arabia has been unable to meet rapid growth in electricity demand with power generated from domestic natural gas, and has had to import fuel oil for power generation.