Chapter 3: World Oil Markets
| In the IEO2006 reference case, world oil demand increases by 47 percent
from
2003 to 2030. Non-OECD Asia, including China and India,
accounts for 43
percent of the increase. |
In the IEO2006 reference case, world oil demand grows from 80 million barrels
per day in 2003 to 98 million barrels per day in 2015 and 118 million barrels
per day in 2030. Demand increases strongly despite world oil prices that
are 35 percent higher in 2025 than in last year’s outlook. Much of the
growth in oil consumption is projected for the nations of non-OECD Asia,
where strong economic growth is expected. Non-OECD Asia (including China
and India) accounts for 43 percent of the total increase in world oil use
over the projection period.
To meet the projected increase in world oil demand in the IEO2006 reference
case, total petroleum supply in 2030 will need to increase by 38 million
barrels per day, to 118 million barrels per day, from the 2003 level of
80 million barrels per day. OPEC producers are expected to provide 14.6
million barrels per day of the increase. Higher oil prices cause a substantial
increase in non-OPEC oil production—23.7 million barrels per day, which
represents 62 percent of the increase in total world oil supplies over
the projection period. The estimates of production increases are based
on current proved reserves and a country-by-country assessment of ultimately
recoverable petroleum.
The oil price path in the IEO2006 reference case reflects a reassessment
of the willingness of oil-rich countries to expand production capacity
as aggressively as envisioned in last year’s projection. It does not represent
a change in the assessment of the ultimate size of the world’s petroleum
resources but rather a lower level of investment in oil development in
key resource-rich regions than was projected in IEO2005. Several factors
contribute to the expectation of lower investment and oil production in
key oil-rich producing regions, including continued strong worldwide economic
growth despite high oil prices, and various restrictions on access and
contracting that affect oil exploration and production companies’ costs.
In IEO2005, OPEC production was projected to increase by 24.0 million barrels
per day between 2002 and 2025. IEO2006 projects an increase in OPEC supply
of only 11.8 million barrel per day over the same period. The resulting
increase in world oil prices dampens world demand in the mid-term and makes
previously uneconomical resources in non-OPEC regions more likely to be
produced. Non-OPEC supplies of both conventional and unconventional resources
(including biofuels, coal-to-liquids, and gas-to-liquids) are expected
to increase as a result. In 2003, world production of unconventional resources
totaled only 1.8 million barrels per day; in the IEO2006 reference case,
unconventional resource supplies rise to 11.5 million barrels per day and
account for nearly 10 percent of total world petroleum supply in 2030.
To assess uncertainties in the reference case projections, IEO2006 includes
a high world oil price case and a low world price case in addition to the
reference case. In all the cases, world oil prices are expressed as the
average price of imported low-sulfur, light crude oil to U.S. refiners
(see box on page 26). In the reference case, world oil prices increase
from $41 per barrel in 2004 to $57 per barrel in 2030 (all prices in real
2004 dollars unless otherwise noted), and oil demand rises to 118 million
barrels per day in 2030. In the low and high world oil price cases, prices
in 2030 are $34 per barrel and $96 per barrel, respectively, accounting
for the substantial range of uncertainty in the world’s future oil markets.
In 2030, oil demand in the two alternative price cases ranges from 102
million barrels per day in the high price case to 128 million barrels per
day in the low price case.
World oil trading patterns change substantially over the projection horizon,
as China and the other countries of non-OECD Asia fuel their growth in
oil demand by taking an increasing share of the world’s oil imports. China’s
petroleum imports are expected to grow fourfold from 2003 to 2030, with
much of the increase coming from Persian Gulf suppliers. In 2003, China
imported 0.9 million barrels per day of oil from Persian Gulf OPEC members,
and in 2030 its Persian Gulf imports total 5.8 million barrels per day.
The rising dependence of China on Middle Eastern oil supplies has geopolitical
implications both for relations between the two regions and for the oil-consuming
world as a whole.
World Oil Demand
World oil consumption rose by about 1.2 million barrels per day in 2005,
after an increase of 2.6 million barrels per day in 2004. The non-OECD
countries accounted for 1.1 million barrels per day of the 2005 increase,
and the OECD as a whole accounted for 0.1 million barrels per day. Unlike
in 2004, when China’s oil use increased by 0.9 million barrels per day,
its demand rose by only 0.4 million barrels per day in 2005, despite continued
strong economic growth. In the United States, a 0.4-percent decline in
oil demand in 2005 resulted from a combination of high prices, hurricane-related
disruptions, and a mild winter [1]. It was the first decline in U.S. demand
since 2001.
In the IEO2006 reference case, growth in world oil demand averages 1.4
percent per year over the 2003 to 2030 period, as the world continues to
experience strong economic growth. World oil prices in 2025 are 35 percent
higher than projected in IEO2005, and as a result world oil demand grows
more slowly in this year’s reference case, to 111 million barrels per day
in 2025, as compared with 119 million barrels per day in the IEO2005 reference
case. In IEO2006, total demand for petroleum liquids rises to 118 million
barrels per day in 2030.
Figure Data |
Figure Data |
Figure Data |
Figure Data |
Table 3. World Oil Reserves by Country as of January 1, 2006
(Billion Barrels)
Printer friendly version 
| Country |
Oil Reserves |
| Saudi Arabia |
264.3 |
| Canada |
178.8 |
| Iran |
132.5 |
| Iraq |
115.0 |
| Kuwait |
101.5 |
| UAE |
97.8 |
| Venezuela |
79.7 |
| Russia |
60.0 |
| Libya |
39.1 |
| Nigeria |
35.9 |
| United States |
21.4 |
| China |
18.3 |
| Qatar |
15.2 |
| Mexico |
12.9 |
| Algeria |
11.4 |
| Brazil |
11.2 |
| Kazakhstan |
9.0 |
| Norway |
7.7 |
| Azerbaijan |
7.0 |
| India |
5.8 |
| Rest of World |
68.1 |
| World Total |
1,292.5 |
|
Table 4. Estimated World Oil Resources, 1995-2025a
(Billion Barrels)
Printer friendly version
| Region |
Proved Reserves |
Reserve Growth |
Undiscovered |
Total |
| OECD |
|
|
|
|
| United States |
21.4 |
76.0 |
83.0 |
180.4 |
| Canada |
178.8 |
12.5 |
32.6 |
223.9 |
| Mexico |
12.9 |
25.6 |
45.8 |
84.3 |
| OECD Europe |
15.1 |
20.0 |
35.9 |
71.0 |
| Japan |
0.1 |
0.1 |
0.3 |
0.5 |
| Australia/New Zealand |
1.5 |
2.7 |
5.9 |
10.1 |
| Non-OECD |
|
|
|
|
| Russia |
60.0 |
106.2 |
115.3 |
281.5 |
| Other Non-OECD Europe/Eurasia |
19.1 |
32.3 |
55.6 |
107.0 |
| China |
18.3 |
19.6 |
14.6 |
52.5 |
| India |
5.8 |
3.8 |
6.8 |
16.4 |
| Other Non-OECD Asia |
10.3 |
14.6 |
23.9 |
48.8 |
| Middle East |
743.4 |
252.5 |
269.2 |
1,265.1 |
| Africa |
102.6 |
73.5 |
124.7 |
300.8 |
| Central and South America |
103.4 |
90.8 |
125.3 |
319.5 |
| Total World |
1,292.5 |
730.2 |
938.9 |
2,961.6 |
| OPEC |
901.7 |
395.6 |
400.5 |
1,697.8 |
| Non-OPEC |
390.9 |
334.6 |
538.4 |
1,263.9 |
|
Figure Data |
Figure Data |
Table 5. OPEC Oil Production, 1990-2030
(Million Barrels per Day)
Printer friendly version
| Year |
Reference Case |
High
Oil Price |
Low
Oil Price |
| History |
| 1990 |
24.5 |
— |
— |
| 2003 |
30.7 |
— |
— |
| Projections |
| 2010 |
37.3 |
32.9 |
37.9 |
| 2015 |
39.7 |
28.7 |
41.0 |
| 2020 |
40.4 |
29.3 |
43.3 |
| 2025 |
42.5 |
29.8 |
46.9 |
| 2030 |
45.3 |
30.9 |
51.0 |
|
Table 6. Non-OPEC Oil Production, 1990-2030
(Million Barrels per Day)
Printer friendly version
| Year |
Reference Case |
High
Oil Price |
Low
Oil Price |
| History |
| 1990 |
42.1 |
— |
— |
| 2003 |
48.9 |
— |
— |
| Projections |
| 2010 |
54.4 |
54.1 |
54.6 |
| 2015 |
58.6 |
61.9 |
60.4 |
| 2020 |
63.7 |
64.9 |
67.1 |
| 2025 |
68.2 |
68.2 |
72.6 |
| 2030 |
72.6 |
71.0 |
76.7 |
|
Much of the world’s incremental oil demand is projected for use in the
transportation sector, where there are few competitive alternatives to
petroleum; however, several of the technologies associated with unconventional
liquids (gas-to-liquids, coal-to-liquids, and ethanol and biodiesel produced
from energy crops) are expected to meet a growing share of demand for petroleum
liquids during the projection period. Of the projected increase in oil
use in the reference case over the 2003 to 2030 period, one-half occurs
in the transportation sector (Figure 26). The industrial sector accounts
for a 39-percent share of the projected increase in world oil consumption,
mostly for chemical and petrochemical processes.
On a regional basis, two parts of the world lead the projected growth in
world oil demand: non-OECD Asia and OECD North America (Figure 27). Outside
North America, oil consumption in the OECD regions grows much more slowly
(by 0.2 percent and 0.5 percent per year in Europe and Asia, respectively),
reflecting expectations of slow growth or declines in population and slow
economic growth over the next 25 years.
In the non-OECD countries, strong expansion of oil use is fueled by robust
economic growth, burgeoning industrial activity, and rapidly expanding
transportation use. The fastest growth in oil demand is projected for the
economies of non-OECD Asia, averaging 3.0 percent per year from 2003 to
2030. Fast-paced increases are also expected for the other non-OECD regions,
including annual growth of oil use that averages 1.4 percent in non-OECD
Europe and Eurasia, 1.5 percent in the Middle East, 1.8 percent in Central
and South America, and 2.3 percent in Africa.
Economic development in Asia will be crucial to long-term growth in oil
markets. China, India, and the other nations of non-OECD Asia are expected
to experience combined economic growth of 5.5 percent per year between
2003 and 2030, the highest rate of growth in the world. This robust expansion
in gross domestic product (GDP) contributes to a 3.0-percent annual increase
in regional oil use.
Oil Reserves and Resources
Historically, estimates of world oil reserves have generally trended upward
(Figure 28). As of January 1, 2006, proved world oil reserves, as reported
by Oil & Gas Journal,3 were estimated at 1,293 billion barrels—15 billion
barrels (about 1 percent) higher than the estimate for 2005 [2].
The largest increase in proved oil reserve estimates was made in Iran.
Iranian oil reserves increased by 5 percent, from 125.8 billion barrels
in 2005 to 132.5 billion barrels in 2006. Higher reserve estimates were
also reported by Saudi Arabia, where reserves increased by 4.9 billion
barrels (2 percent) in 2006, and Kuwait, where reserves increased by 2.5
billion barrels (3 percent). Venezuela also showed a substantive increase
in reserves, with a gain of 2.5 billion barrels (3 percent). Chad, a country
that previously had not been included in the Oil & Gas Journal survey,
reported 1.5 billion barrels of proved oil reserves in 2006. Declining
oil reserves were reported in Mexico (down by 1.7 billion barrels), with
smaller losses in Norway (0.8 billion barrels), the United States (0.5
billion barrels), and the United Kingdom (0.5 billion barrels), among others.
Of the world’s total proved oil reserves (Figure 29), 71 percent is located
in the Middle East or Canada (where the Canadian Association of Petroleum
Producers includes 174.1 billion barrels of Canadian oil sands as a conventional
reserve). Among the top 20 oil reserve holders, 8 are OPEC member countries
that together account for 65 percent of the world’s total reserves (Table
3). It should be noted that there are sources of petroleum reserve estimates
other than those offered in the Oil & Gas Journal, including World Energy [3], the OPEC Secretariat [4], and BP’s Statistical Review of World Energy [5].
Table 4 shows estimates of the conventional oil resource base by region
out to the year 2025. Reserve growth and undiscovered estimates are based
on the World Petroleum Assessment 2000 by the U.S. Geological Survey (USGS).
The oil resource base is defined by three categories: remaining reserves
(oil that has been discovered but not produced); reserve growth (increases
in reserves resulting mainly from technological factors that enhance a
field’s recovery rate); and undiscovered (oil that remains to be found
through exploration). The reserve growth and undiscovered volumes in Table
4 are derived from the USGS mean estimate, which is an average assessment
over a wide range of uncertainty for reserve growth and undiscovered resources.
The USGS provides three point estimates of undiscovered and inferred resources:
the mean, a 5-percent lower bound, and a 95-percent upper bound with no
price relationship. The IEO2006 projections for oil production are based
on the USGS mean estimate, which is derived from historical data on growth
in oil and gas reserves for fields of similar size, without consideration
of economic or political events [6].
The Composition of World Oil Supply
An iterative approach was used to determine the composition of world oil
supply in each of the three IEO2006 oil price cases. For example, to develop
the reference case an initial world oil price path was assumed for the
2010 to 2030 period. Future total world oil demand was then estimated on
the basis of that price path and assumptions about future economic growth.
The assumed price path was also used to estimate future non-OPEC production
of conventional oil and production of unconventional liquids from both
OPEC and non-OPEC countries, based on estimates of the total petroleum
resource base. Finally, the level of OPEC conventional production that
would be needed to balance world oil markets for the assumed reference
case price path was calculated by subtracting non-OPEC conventional supplies
and total unconventional supplies from total world oil demand. The likelihood
that OPEC producers would supply this residual demand at the assumed price
path was then evaluated, based on estimates of total OPEC oil resources
and the apparent preferred production levels of key OPEC members.
If the OPEC production level required to balance the global market appeared
too high, the assumed oil price path was adjusted upward, and a new iteration
of demand and supply estimates was derived. Conversely, if the required
OPEC production level appeared too low, the oil price path was adjusted
downward for the next iteration. The reference case oil price path and associated
composition of world oil supply represent a trajectory consistent with
the IEO2006 reference case assumptions about economic growth, supply and
demand elasticities, the ultimate size of global oil resources, and preferred
production levels for OPEC members.
Once the reference case oil price path and composition of world oil supply
were determined, the same iterative approach was used to develop high and
low world oil price cases. In the high world oil price case, worldwide
crude oil resources were assumed to be 15 percent smaller, and thus more
expensive to produce, than in the reference case, and the preferred production
levels of OPEC producers were reduced. In the low price case, the worldwide
petroleum resource was assumed to be 15 percent larger and therefore cheaper
to produce than in the reference case, and OPEC preferred production levels
were increased.
It is important to note what this approach did and did not assume. A business-as-usual
oil market environment was assumed. Disruptions in oil supply for any reason
(war, terror, weather, geopolitics) were not assumed. It was assumed that
all non-OPEC oil projects that show a favorable rate of return on investment
would be funded. For the period out to 2030, there is sufficient oil to
meet worldwide demand. Peaking of world oil production is not anticipated
until after 2030.
In the IEO2006 reference case, world oil supply in 2030 exceeds the 2003
level by 38 million barrels per day. Increases in production are expected
for both OPEC and non-OPEC producers; however, only 38 percent of the total
increase is expected to come from OPEC areas. In 2030, OPEC is expected
to produce 45.3 million barrels per day and non-OPEC producers 72.6 million
barrels per day in the IEO2006 reference case. Over the past two decades,
the growth in non-OPEC oil supply has resulted in an OPEC market share
substantially under its high of 52 percent in 1973. In 2003, OPEC produced
39 percent of the world’s oil supplies. High oil prices, new exploration
and production technologies, aggressive cost-reduction programs by industry,
and the emergence of unconventional resources contribute to the outlook
for continued growth in non-OPEC oil production.
The reference case projects that about 62 percent of the increase in petroleum
demand over the next 25 years will be met by increased production from
non-OPEC suppliers. Non-OPEC production in 2030 is projected to be almost
24 million barrels per day higher than it was in 2003 (Figure 30). The IEO2006 estimates of OPEC production capacity in 2010 are slightly less
than those projected in IEO2005, reflecting a shift toward non-OPEC supply
projects as a result of the higher prices assumed in IEO2006. The high
world oil price case assumes that OPEC members might pursue significant
price escalation through conservative capacity expansion decisions rather
than undertake major production expansion programs. Such behavior would
tend to raise world oil prices, and in this scenario OPEC suppliers increase
their production capacity by only 4 million barrels per day between 2003
and 2030, in contrast to the reference case, where OPEC increases production
capacity by 18 million barrels per day.
Expansion of OPEC Production Capacity
It is generally acknowledged that OPEC members with large reserves and
relatively low costs for expanding production capacity can accommodate
sizable increases in petroleum demand. In the IEO2006 reference case, the
production call on OPEC suppliers grows at an annual rate of 1.5 percent
through 2030 (Figure 31 and Table 5). OPEC capacity utilization ranges
between 90 and 93 percent for the duration of the projection period.
Amidst enormous uncertainty, Iraq’s role in OPEC in the next several years
will be of particular interest. In 1999, Iraq expanded its production capacity
to 2.8 million barrels per day in order to reach the slightly more than
$5.2 billion in oil exports allowed by United Nations Security Council
resolutions. In the IEO2006 reference case, Iraq is assumed to maintain
its current oil production capacity of about 2.5 million barrels per day
into 2006 [7]. Iraq has indicated a desire to expand its production capacity
aggressively, to more than 6 million barrels per day, once the security
and political situation in the country has stabilized. Preliminary discussions
of exploration projects have already been held with a number of potential
outside investors. Such a significant increase in Iraqi oil exports would
ease market tightness. Iraq’s oil production reaches 5.5 million barrels
per day in 2030 in the reference case.
In the IEO2006 reference case, OPEC members outside the Persian Gulf increase
their production capacity moderately, in part because of their higher capacity
expansion costs. There is some optimism regarding Nigeria’s offshore production
potential, although it is unlikely to be developed until the later part
of this decade. Except for modest near-term increments to supply, Algeria
and Libya are expected to experience flat production throughout the projections;
Indonesia’s production capacity is expected to decline over the projection
period. Venezuela is expected to see some increases in production, especially
toward the end of the projection period. The lackluster increases in OPEC
supply outside the Persian Gulf suggest that the organization’s supply
will rely even more on Persian Gulf members, whose current 71-percent share
of total OPEC supply increases to nearly 73 percent in 2030. Tables E1-E6
in Appendix E show the ranges of production potential for both OPEC and
non-OPEC producers.
Non-OPEC Supply
The expectation in the late 1980s and early 1990s was that non-OPEC production
in the longer term would stagnate or decline gradually in response to resource
constraints. The relatively low cost of developing oil resources within
OPEC countries (especially those in the Persian Gulf region) was considered
such an overwhelming advantage that non-OPEC production potential was viewed
with considerable pessimism. In actuality, however, despite several periods
of relatively low prices, non-OPEC production has risen every year since
1993, adding more than 6.9 million barrels per day between 1993 and 2003
[8].
Non-OPEC supply has become increasingly diverse over the past three decades,
and growth in non-OPEC oil production has played a significant role in
the erosion of OPEC’s market share, which has fallen from 52 percent in
1973 to 39 percent in 2003. North America dominated non-OPEC supply in
the early 1970s, the North Sea and Mexico evolved as major producers in
the 1980s, and much of the new production in the 1990s came from the economies
of South America, West Africa, the non-OPEC Middle East, and China.
Higher world oil prices in the IEO2006 reference case allow non-OPEC suppliers
to retain market share of world oil supplies through 2030. Non-OPEC supply
from proven reserves increases steadily, from 48.9 million barrels per
day in 2003 to 72.6 million barrels per day in 2030 (Table 6), as high
prices attract investment in areas previously considered uneconomical.
As a result, the non-OPEC market share in 2030, at 62 percent of the world’s
oil supply, is slightly higher than its 2003 share of 61 percent.
In addition, the reference case outlook for production of unconventional
liquids (especially from oil sands and ultra-heavy oils) is twice as optimistic
in IEO2006 as it was in IEO2005, reflecting the impact of a much higher
price path. In the IEO2005 reference case, unconventional production rose
to 5.7 million barrels per day in 2025; in IEO2006, unconventional supplies
reach 9.7 million barrels per day in 2025 and 11.5 million barrels per
day in 2030. In the IEO2006 high world oil price case, unconventional liquids
production rises to 16.3 million barrels per day in 2025 and 21.1 million
barrels per day in 2030.
In the IEO2006 reference case, the decline in North Sea production is slowed
slightly relative to past outlooks, based on the implementation of strategies
for redeveloping mature fields. Production from Norway, OECD Europe’s largest
producer, is expected to peak at about 3.6 million barrels per day in 2006
and then decline gradually to about 2.5 million barrels per day in 2030
with the maturing of some of its larger and older fields. The United Kingdom
sector is expected to produce about 2.2 million barrels per day in 2010,
followed by a decline to 1.4 million barrels per day in 2030.
With higher oil prices assumed to continue, oil production in the non-OECD
Europe and Eurasian region exceeds 14.0 million barrels per day in 2015,
based in large part on the potential investment outlook for the Caspian
Basin region, where long-term production potential still is regarded with
considerable optimism. Caspian output more than doubles, to 4.2 million
barrels per day, in 2015 and increases steadily thereafter, although there
still is considerable uncertainty about export routes from the Caspian
Basin region.
North African producers Egypt and Tunisia produce mainly from mature fields
and show little promise of adding to their reserve posture. As a result,
their production volumes decline gradually in the projections. In East
Africa, Sudan is expected to produce significant volumes by the end of
this decade and could exceed 500,000 barrels per day in 2030. Eritrea,
Somalia, and South Africa also have some resource potential, but they are
not expected to produce significant volumes until late in the projections.
Several West African producers—Angola, Cameroon, Chad, Congo (Brazzaville),
Equatorial Guinea, Gabon, Mauritania, Niger, Sao Tome and Principe, and
Ivory Coast—are expected to reap the benefits of substantial exploration
activity, especially if current high oil prices persist. Angola became
a million barrel per day producer in 2004; and given the excellent deepwater
exploration results, it could produce up to 3.4 million barrels per day
in the later years of the projections. The other West African producers
with offshore tracts are expected to increase output by up to 1.1 million
barrels per day by the end of the projection period.
Oil producers in the Pacific Rim are expected to increase their production
volumes as a result of enhanced exploration and extraction technologies.
India’s deepwater prospects are expected to show some encouraging production
increases in this decade, with the potential for significant increases
near the end of the projection period. Vietnam’s long-term production potential
still is viewed with considerable optimism, although exploration activity
has been slower than originally hoped. Output from Vietnamese fields is
projected to exceed 375,000 barrels per day in 2015. In China, conventional
oil production declines slightly, to about 3.2 million barrels per day
in 2030.
Australia has continued to make additions to its proved reserves, and its
oil production is expected to reach 900,000 barrels per day by the end
of this decade. Malaysia shows little potential for any significant new
finds, and its output is expected to peak at around 750,000 barrels per
day in this decade and then decline gradually to less than 700,000 barrels
per day in 2030. Papua New Guinea continues to add to its reserve posture
and is expected to achieve production volumes approaching 110,000 barrels
per day by the end of this decade, followed by only a modest decline over
the remainder of the projection period. Exploration and test-well activity
have pointed to some production potential for Bangladesh and Myanmar (formerly,
Burma), but significant output is not expected until after 2010.
In North America, moderately declining U.S. output is expected to be supplemented
by significant production increases in Canada and Mexico. Canada’s conventional
oil output contracts steadily in the reference case, by about 1.0 million
barrels per day over the next 25 years, but an additional 2.8 million barrels
per day of unconventional output from oil sands projects is added. The IEO2006 reference case assumes in the sustained higher world oil price
environment, Mexico’s state oil company, Pemex will successfully lobby
to use a larger portion of its profits to fund exploration and production
investments and thereby increase production in the long-term. Production
in Mexico exceeds 4.0 million barrels per day by the end of the decade
and continues increasing to 5.0 million barrels per day by 2030, despite
the anticipated decline in production of Mexico’s largest oil field at
Cantarell [9].
Figure Data |
Table 7. Worldwide Petroleum Trade in the Reference Case, 2003 and 2030
(Million Barrels per Day)
Printer friendly version
| Exporting Region |
Importing Region |
Total Exports |
| OECD |
Non-OECD |
| North America |
Europe |
Asia |
Total |
China |
Other Asia |
Rest of World |
Total |
2003 |
| OPEC |
| Persian Gulf |
2.5 |
2.7 |
6.1 |
11.3 |
0.9 |
4.4 |
5.9 |
11.2 |
22.5 |
| North Africa |
0.6 |
1.9 |
0.0 |
2.6 |
0.1 |
0.0 |
0.3 |
0.4 |
3.0 |
| West Africa |
1.1 |
0.3 |
0.2 |
1.6 |
0.2 |
0.0 |
0.2 |
0.4 |
1.9 |
| South America |
1.7 |
0.1 |
0.2 |
2.0 |
0.1 |
0.0 |
1.0 |
1.1 |
3.1 |
| Asia |
0.0 |
0.0 |
0.4 |
0.5 |
0.3 |
0.4 |
0.0 |
0.8 |
1.2 |
| Total OPEC |
5.9 |
5.1 |
6.9 |
17.9 |
1.6 |
4.8 |
7.4 |
13.8 |
31.7 |
| Non-OPEC |
|
|
|
|
|
|
|
|
|
| OECD Europe |
0.5 |
0.0 |
0.0 |
0.5 |
0.0 |
0.0 |
0.1 |
0.1 |
0.7 |
| Brazil and Caribbean Basin |
0.7 |
0.3 |
0.0 |
1.0 |
0.1 |
0.0 |
0.1 |
0.1 |
1.2 |
| Russia and Caspian Area |
0.4 |
2.9 |
0.2 |
3.5 |
0.4 |
1.2 |
0.8 |
2.4 |
5.8 |
| Other Non-OPEC |
5.9 |
2.5 |
1.0 |
9.4 |
0.7 |
1.1 |
2.2 |
4.0 |
13.4 |
| Total Non-OPEC |
7.5 |
5.7 |
1.2 |
14.5 |
1.2 |
2.3 |
3.1 |
6.7 |
21.1 |
| Total Petroleum Imports |
13.5 |
10.8 |
8.1 |
32.4 |
2.8 |
7.1 |
10.6 |
20.4 |
52.8 |
2030 |
| OPEC |
| Persian Gulf |
3.5 |
3.3 |
5.8 |
12.6 |
5.8 |
8.4 |
7.4 |
21.6 |
34.3 |
| North Africa |
0.6 |
1.9 |
0.2 |
2.6 |
0.4 |
0.5 |
0.6 |
1.5 |
4.1 |
| West Africa |
1.1 |
0.7 |
0.4 |
2.2 |
1.2 |
0.2 |
0.4 |
1.8 |
4.0 |
| South America |
2.3 |
0.3 |
0.5 |
3.0 |
0.4 |
0.3 |
0.6 |
1.4 |
4.4 |
| Asia |
0.1 |
0.1 |
0.5 |
0.7 |
0.5 |
0.1 |
0.3 |
1.0 |
1.7 |
| Total OPEC |
7.5 |
6.3 |
7.3 |
21.1 |
8.4 |
9.5 |
9.4 |
27.4 |
48.5 |
| Non-OPEC |
| OECD Europe |
1.3 |
0.0 |
0.1 |
1.4 |
0.1 |
0.1 |
0.1 |
0.3 |
1.7 |
| Brazil and Caribbean Basin |
1.6 |
0.9 |
0.4 |
2.9 |
0.2 |
0.3 |
1.0 |
1.5 |
4.4 |
| Russia and Caspian Area |
0.5 |
2.4 |
0.8 |
3.6 |
0.4 |
0.9 |
1.7 |
2.9 |
6.6 |
| Other Non-OPEC |
8.5 |
1.9 |
0.6 |
10.9 |
1.9 |
0.6 |
2.7 |
5.1 |
16.1 |
| Total Non-OPEC |
11.9 |
5.2 |
1.9 |
18.9 |
2.5 |
1.9 |
5.5 |
9.9 |
28.8 |
| Total Petroleum Imports |
19.4 |
11.5 |
9.2 |
40.1 |
10.9 |
11.4 |
15.0 |
37.3 |
77.3 |
|
Figure Data |
Oil producers in South America have significant potential for increasing
output over the next decade. Brazil became a million barrel per day producer
of crude oil in 1999, with considerable production potential waiting to
be tapped. Brazil’s production rises throughout the projection period,
topping 3.9 million barrels per day of conventional supply and 0.6 million
barrels per day of unconventional supply in 2030. Colombia’s current economic
downturn and civil unrest have delayed development of its oil production
infrastructure, but its output is expected to exceed 610,000 barrels per
day within the decade, with continued modest increases over the remainder
of the projection period. In both Brazil and Colombia, the oil sector would
benefit significantly from the creation of favorable climates for foreign
investment. Argentina is expected to increase its production volumes by
at least 65,000 barrels per day over the next 3 years, and by the end of
the decade it could possibly become a million barrel per day producer.
Although the current political situation in Ecuador is in transition, there
is still optimism that Ecuador will double production volumes over the
projection period.
World Oil Prices
The world oil price in IEO2006 is defined as the annual average price of
imported low-sulfur, light crude oil to U.S. refiners (see discussion on "World Oil Prices in IEO2006"). In the low world oil price, reference, and high world oil price cases,
average world oil prices in 2030 are $34, $57, and $96 per barrel, respectively
(Figure 32). (All prices are in real 2004 dollars—i.e., inflation-adjusted
dollars—unless otherwise noted.)
The IEO2006 oil price paths reflect a reassessment of the willingness of
oil-rich countries to expand production capacity as aggressively as envisioned
last year. It does not represent a change in the assessment of the ultimate
size of the world’s petroleum resources but rather a lower level of investment
in oil development in key resource-rich regions than was projected in IEO2005 [10]. Resources are not expected to be a key constraint on world demand
to 2030. Rather more important are the political, economic, and environmental
circumstances that could shape developments in oil supply and demand.
The IEO2006 high and low oil price cases are based on different assumptions
about world oil supply. The reference case uses the USGS mean oil and natural
gas resource estimate.4 The high price case assumes that the worldwide
crude oil resource is 15 percent smaller and is more costly to produce
than assumed in the reference case. The low price case assumes that the
worldwide resource is 15 percent more plentiful and is cheaper to produce
than assumed in the reference case. Thus, the major price differences across
the three cases reflect uncertainty with regard to both the supply of resources
(primarily undiscovered and inferred) and the cost of producing them [11].
Although oil prices rose by more than $9 per barrel over the course of
2004 and an additional $15 per barrel in 2005, these developments are not
indicative of the long-term trend in the IEO2006 reference case. From record
nominal high levels throughout 2006, oil prices in the reference case decline
gradually to $47 per barrel in 2014, then rise by about 1.2 percent per
year to $57 per barrel in 2030. In all the IEO2006 oil price cases, oil
demand rises significantly over the projection period. In the high and
low price cases, the increases in oil consumption from 2003 to 2030 are
22 million barrels per day and 48 million barrels per day, respectively.
Oil prices have been highly volatile over the past 25 years, and periods
of price volatility can be expected in the future principally because of
unforeseen political and economic circumstances. It is widely recognized
that tensions in the Middle East, for example, could give rise to serious
disruptions of normal oil production and trading patterns. On the other
hand, market forces can play a significant role in restoring balance over
an extended period. High real prices deter consumption and encourage the
emergence of significant competition from large marginal sources of oil,
which currently are uneconomical to produce, and other energy supplies.
Persistently low prices have the opposite effects.
Limits to long-term oil price escalation include substitution of other
fuels (such as natural gas) for oil, marginal sources of conventional oil
that become reserves (i.e., economically viable) when prices rise, and
unconventional sources of oil that become reserves at still higher prices.
Advances in exploration and production technologies are likely to bring
prices down when such additional oil resources become part of the reserve
base.
Worldwide Petroleum Trade
Because oil is fungible and traded in world commodities markets, there
is much uncertainty associated with projections of future patterns of oil
trade; however, anticipated changes in the world’s oil trading patterns—
particularly, the shifting regional dependence of importing regions on
producing regions—may have important geopolitical ramifications. In 2003,
the OECD economies imported 17.9 million barrels of oil per day from OPEC
producers. Of that total, 11.3 million barrels per day came from the Persian
Gulf region. Oil movements to OECD economies represented 57 percent of
the total petroleum exported by OPEC member nations and 50 percent of all
Persian Gulf exports (Table 7). By the end of the projection period, OPEC
exports to OECD economies in the reference case are estimated to be about
3.2 million barrels per day higher than their 2003 level, and almost 42
percent of the increase is expected to come from the Persian Gulf region.
Despite such a substantial increase, the share of total petroleum exports
that goes to OECD member nations in 2030 is more than 9 percentage points
below their 2003 share in the reference case, and their share of Persian
Gulf exports falls by more than 13 percent. The significant shift expected
in the balance of OPEC export shares between the OECD and non-OECD economies
is a direct result of the economic growth anticipated for the non-OECD
nations, especially non-OECD Asia. OPEC petroleum exports to non-OECD economies
increase by 13.6 million barrels per day over the projection period, with
more than 85 percent of the increase going to the non-OECD economies of
Asia. China, alone, is likely to import about 8.4 million barrels per day
from OPEC in 2030, 69 percent of which is expected to come from Persian
Gulf producers.
North America’s petroleum imports from the Persian Gulf in the reference
case increase by more than 40 percent from 2003 to 2030 (Figure 33). At
the same time, more than 40 percent of North America’s total imports in
2030 is expected to come from Atlantic Basin producers and refiners, with
significant increases anticipated in crude oil imports from Latin American
producers, including Venezuela, Brazil, Colombia, and Mexico. West African
producers, including Nigeria and Angola, are also expected to increase
their export volumes to North America. Caribbean Basin refiners are expected
to account for most of the increase in North America’s imports of refined
products.
With a moderate decline in North Sea production, OECD Europe is expected
to import increasing amounts from Persian Gulf producers and from OPEC
member nations in western Africa. Substantial imports from the Caspian
Basin are also expected. OECD Asian nations are expected to increase their
already heavy dependence on OPEC oil. The non-OECD economies of Asia are
expected to more than double their total petroleum imports between 2003
and 2030.
Notes and Sources
References |