Despite the dramatic recent weakening in global energy markets, ongoing economic expansion in Asia – particularly in China and India – will drive continued growth in the world’s demand for energy over the next 20 years.
According to the new edition of the BP Energy Outlook 2035, published yesterday, global demand for energy is expected to rise by 37% from 2013 to 2035, or by an average of 1.4% a year.
The Outlook looks at long-term energy trends and develops projections for world energy markets over the next two decades.
But Spencer Dale, BP’s chief economist, warned; “After three years of high and deceptively steady oil prices, the fall of recent months is a stark reminder that the norm in energy markets is one of continuous change
“It is important that we look through short term volatility to identify those longer term trends in supply and demand that are likely to shape the energy sector over the next 20 years and so help inform the strategic choices facing the industry and policy makers alike.”
“The Outlook projects that demand for oil will increase by around 0.8% each year to 2035. The rising demand comes entirely from the non-OECD countries; oil consumption within the OECD peaked in 2005 and by 2035 is expected to have fallen to levels not seen since 1986. By 2035 China is likely to have overtaken the US as the largest single consumer of oil globally.
“The current weakness in the oil market, which stems in large part from strong growth in tight oil production in the US, is likely to take several years to work through.
“In 2014, tight oil production drove US oil output higher by 1.5 million barrels a day – the largest single-year rise in US history. But further out, the growth in tight oil is likely to slow and Middle East production will gain ground once more.”
By the 2030s, the US is likely to have become self-sufficient in oil, after having imported 60% of its total demand as recently as 2005.
The continuing growth of shale gas will also mean that in the next few years North America will switch from being a net importer to net exporter of gas.
Energy self-sufficiency in North America – which is expected to become a net exporter of energy this year – and increasing LNG trade are also over time expected to have fundamental impacts on global energy flows.