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MOSCOW (MRC) -- Global oil
demand may have already peaked, according to BP's latest long-term energy
outlook, as the COVID-19 pandemic kicks the world economy onto a weaker growth
trajectory and accelerates the shift to cleaner fuels, reported S&P Global.
Demand for oil will
be the biggest casualty over lower energy demand in the coming three decades as
weaker economic growth and a faster shift to renewable energy accelerates the
demise of oil-based transport fuels, BP said its Energy Outlook 2020 published
Sept. 14.
Global demand for liquid fuels, including oil and biofuels,
will almost halve to less than 55 million b/d by 2050, when oil's share of the
global energy mix will slip to just 14% from around a third currently, according
to BP's new central "Rapid" energy transition scenario.
Even under a more
conservative "Business as Usual" scenario, BP now sees global oil demand peaking
within a few years at just over the 100 million b/d level seen in
2019.
"There is a risk that the economic losses from COVID-19 may be
significantly bigger, especially if there are further waves of infection," BP
said.
Under its central scenario, BP sees oil demand around 3 million b/d
lower in 2025 and 2 million b/d lower in 2050 as a result of the pandemic. About
two-thirds of the impact reflects a weaker global economy, with the remaining
third a result of lasting behavioral changes due to COVID-19, BP
said.
These "scarring effects" from the crisis will see absolute demand
for fossil fuels fall in all future scenarios, BP's chief economist Spencer Dale
said, marking an "unprecedented" historical decline for any class of fuel in the
world's energy mix.
Oil in transport alone will peak in the mid- to late
2020s in all scenarios, Dale said, driven by progress on efficiency and
electrification.
Less global air travel and more home-based work could be
a lasting legacy of the pandemic, while policy pressure could accelerate the
uptake of electric cars, boost recycling and reduce the use of single-use
plastics, he said.
"The diminished role for oil reflects the
proportionally higher impact of COVID-19 on the transport sector, faster
penetration of electricity and hydrogen in transport, and more stringent policy
assumptions regarding the use of plastics," BP said in the report.
By
2050, both bioenergy, such as biofuels, and hydrogen will account for around 7%
of primary energy consumption, BP's central scenario predicts, and the share of
oil in transport slumps to 40% from 90% in 2018.
"...In all our
scenarios, the share of renewables energy grows more quickly than any fuel in
history," Dale said.
Renewables are set to see their share of the global
energy mix jump from 5% in 2018 to 45% in the "Rapid" scenario, led by a jump in
wind and solar capacity. Electricity in the energy mix increases from a little
over 20% in 2018 to 45%, with 350 GW of new wind and solar growth alone by
2035.
With clean, renewable energy surging, BP sees the role of natural
gas lower than in last year's report, squeezed by a more pronounced shift to
renewable energy in power generation and a greater substitution by electricity
and hydrogen. Gas demand now peaks in the mid-2030s at 26% of the energy mix in
the "Rapid" scenario before slipping to 21% by 2050.
BP makes the shift
to its new central scenario to "Rapid" after its new CEO Bernard Looney set out
ambitious plans for the oil major's pivot to cleaner energy back in February.
Europe's number two oil company wants to shrink its oil and gas production by at
least 1 million b/d of oil equivalent, or 40%, over the next decade, in a
radical transformation.
Under BP's base-case "Evolving Transition"
scenario last year, the company saw global liquids demand holding steady at 108
million b/d to 2040, after peaking in 2035.
BP's more pessimistic outlook
for oil demand contrasts with the International Energy Agency, which in November
predicted oil demand growth would be flattening out by 2030 to reach 106.4
million b/d in 2040.
Speaking in July, the head of the IEA, Fatih Birol,
said he "would not be surprised" if global oil demand fully recovers to over 100
million b/d after the pandemic is brought under control.
S&P Global
Platts Analytics sees global oil demand peaking in 2040 at around 120 million
b/d before slipping to 116.5 million b/d in 2050 under a "most likely"
scenario.
Compared to last year's report, BP's renewable energy's share
of global energy in 2040 is now 7 percentage points higher, due to
higher-than-expected contributions from bioenergy, wind and solar power,
supported by "green" hydrogen production.
Under BP's central scenario,
carbon emissions fall by around 70% by 2050, driven by high carbon prices and
strong climate policy. Under "Business as Usual," carbon emissions fall by
around 10% by 2050, having peaked in the mid-2020s as policy and social
preferences continue to evolve as in recent years.
Earlier this year, BP
said the deadly coronavirus outbreak could cut global oil
demand growth by 40 per cent in 2020, putting pressure on Opec producers and
Russia to curb supplies to keep prices in check.
And in September 2019,
six world's major petrochemical companies in Flanders, Belgium, North
Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the
creation of a consortium to jointly investigate how naphtha or gas steam
crackers could be operated using renewable electricity instead of fossil fuels.
The Cracker of the Future consortium, which includes BASF, Borealis, BP,
LyondellBasell, SABIC and Total, aims to produce base chemicals while also
significantly reducing carbon emissions. The companies agreed to invest in
R&D and knowledge sharing as they assess the possibility of transitioning
their base chemical production to renewable electricity.
Ethylene and
propylene are feedstocks for producing polyethylene (PE) and polypropylene
(PP).
According to MRC's ScanPlast report,
Russia's overall PE production totalled 1,712,400 tonnes in the first seven
months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE)
accounted for the greatest increase in the output. At the same time, overall PP
production in Russia increased in January-July 2020 by 24% year on year to
1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the
output. |
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