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MOSCOW (MRC) -- Global oil demand is
forecast to peak by around 2040 because transport-fuel demand will decline
steeply and economic growth will slow in the post-coronavirus world, the
Institute of Energy Economics, Japan, said in its annual IEEJ Outlook 2021 on
Oct. 15, reported S&P
Global.
"In the post-coronavirus era, we expect demand for transport
fuels will be curbed significantly," Shigeru Suehiro, senior economist and
manager at IEEJ's econometric and statistical analysis group, told an online
press briefing.
"We see oil demand peaking in around 2040 as a result of a
slowing economy, together with less fuel demand for cars, aircraft and
ships."
In its post-pandemic scenario, the IEEJ forecasts global oil
demand will peak at 106 million b/d in 2040 and fall further to 102 million b/d
in 2050 mainly due to dwindling demand for cars, Suehiro said.
"In such a
world, oil exporting countries such as those in the Middle East may suffer a
major impact, and it will be critically important for them to diversify their
economies," Suehiro said.
Stressing that oil demand would remain strong
after having peaked, upstream investment would be vital to preventing a supply
crunch and the destabilization of the oil market in the future, he
said.
The IEEJ, an affiliate of the Ministry of Economy, Trade and
Industry, releases its global energy outlook until 2050 on an annual
basis.
In its reference scenario, under which it assumes the impact of
the pandemic on global energy demand will dissipate in few years, the IEEJ
expects energy demand will increase toward 2050 due to the growth in Asian
demand, Suehiro said.
The reference scenario is based on assumptions that
current energy and environmental policies will be maintained without the
introduction of radical decarbonization policies.
The IEEJ forecasts oil
demand will increase to 116 million b/d in 2050 mainly due to growing demand for
transport fuel and petrochemical feedstocks based on its reference scenario,
Suehiro said.
Roughly half of the oil demand growth of about 20 million
b/d by 2050 will be met by OPEC producers in the Middle East because of their
abundant reserves and low production costs in the IEEJ reference
scenario.
"In Asia, we expect to see a major change in the landscape. The
significant growth in Asian energy demand has been led mainly by China's
increased energy demand [in recent years]," Suehiro said. "In the next 30 years,
India and ASEAN will be the main drivers of demand growth rather than
China."
By 2050, India will account for over a third of the increase in
global energy demand as Chinese demand will peak in the late 2030s, under the
IEEJ reference scenario.
While the IEEJ forecasts fossil fuels will
account for 80% of global energy demand in 2050 under its reference scenario, in
its advanced technologies scenario it puts it at 67%, with demand for oil, coal
and natural gas having peaked by then.
The advanced technologies scenario
is based on assumptions that the maximum amount of innovative technologies have
been introduced as countries enforce strict energy and environmental policies to
combat climate change.
In its latest outlook, the IEEJ has introduced a
Circular Carbon Economy scenario, under which it looks at how countries around
the world could pursue both using fossil fuels and reducing carbon dioxide
emissions by advancing Reduce, Reuse, Remove and Recycle, or 4Rs
technologies.
CCE is among key agenda to be discussed during the Saudi
Arabia-hosted G20 summit in November.
The CCE scenario assumes the same
67% share of fossil fuels in energy demand in 2050 as in the advanced
technologies scenario, but CO2 emissions will be reduced by another 5 billion
mt.
"By maximizing the utilization of decarbonization technology, CO2
emissions could be significantly reduced even though the share of fossil fuels
in the energy mix remains unchanged," senior economist at IEEJ's planning &
administration unit, Yoshikazu Kobayashi, said at the briefing.
"In other
words, the use of fossil fuels and a reduction in CO2 emissions can be pursued
at the same time by maximizing the use of decarbonization technologies,"
Kobayashi said.
The IEEJ expects introduction of hydrogen to replace some
of coal-fired power generation and replace some oil products in transport to be
among the possible options to reduce CO2 significantly, Kobayashi
said.
Hydrogen is forecast to account for 5% of the 2050 global energy
mix for power generation in the IEEJ's CCE scenario.
As MRC wrote
before, 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.
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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