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Feb 18 2015, 10.20am GMT


BP posted its Energy Outlook 2035 report claiming that energy consumption will increase by 37% between 2013 and 2035.

BP, UK’s primary energy producer and oil production company, released its Energy Outlook 2035 report stating that ‘Virtually all (96%) of the projected growth is in the non-OECD, with energy consumption growing at 2.2% p.a.. OECD (Organisation for Economic Co-operation and Development) energy consumption, by contrast, grows at just 0.1% p.a. over the whole period and is actually falling from 2030.’

The report reviewed several shifting patterns in the energy markets:

First, trade patterns are shifting. The strong growth of US tight oil in recent years has had a dramatic impact, with oil increasingly flowing from West to East rather than East to West. This is likely to continue, with strong growth in China and India driving energy demand. We also expect to see the market in gas become more global as liquefied natural gas (LNG) integrates regional markets and leads to greater congruence in global price movements.

Second, the energy mix continues to shift. Fossil fuels are projected to provide the majority of the world’s energy needs, meeting two-thirds of the increase in energy demand out to 2035. However, the mix will shift. Renewables and unconventional fossil fuels will take a larger share, along with gas, which is set to be the fastest growing fossil fuel, as well as the cleanest, meeting as much of the increase in demand as coal and oil combined. Meanwhile, coal is now expected to be the slowest growing fuel, as industrialization in emerging Asian economies slows and environmental policies around the globe tighten.

Against the backdrop of a predicted population growth reaching 8.7 billion by 2035, and increases in income per person as the key drivers behind growing demand for energy, an additional 1.6 billion people will need energy.

For oil consumption, industry has been the fastest growing sector since 2000, averaging 2.7% p.a., but projected growth will slow to 1.4% p.a. The ‘other’ sector (residential, services and agriculture) is now expected to become the fastest growing sector, averaging 1.6% p.a. 2013-35. Another factor to drive oil consumption up is the prediction that the global vehicle fleet (commercial vehicles and passenger cars) will more than double from around 1.2 billion today to 2.4 billion by 2035. In turn, industrial sectors will account for over 80% of total demand growth for natural gas due to the pattern shift in usage.

Natural gas is the fastest growing fossil fuel (1.9% p.a.), with oil (0.8% p.a.) marginally ahead of coal. Natural gas is trading at 2.751 and currently in a slump at levels last seen in September 2012, whilst oil is still in daily volatility – overall down 50% over the last 7 months at $53.60, but up from $43.57 at the end of January this year.

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