Oil
supply more diverse; non-Opec output increasing
Posted: 11 June 2003
World oil supply is becoming more diverse and world oil production
capacity comfortably exceeds world oil demand, said BP chief economist
Peter Davies today.
"As a result, producers were able to meet the needs of oil
consumers during the Iraq war and during unplanned supply disruptions
in Venezuela and Nigeria. Consuming nations were not required to
tap their emergency reserves. This is good news for those concerned
about energy security, but it should not lead to complacency,"
Davies said at the launching of the BP Statistical Review of World
Energy 2003.
OPEC, while using spare capacity of almost 4 million barrels a
day to keep the market supplied during the war, cut its average
daily output by 1.87 million barrels a day in response to weak global
oil demand and a 1.45 million barrel-a-day increase in non-OPEC
production. OPEC production has declined in three of the last four
years.
"The story is one of supply momentum that looks set to continue,"
Davies said. "Russian oil production is up 25 per cent in three
years and Russia has been joined by a new group of oil producing
basins, across several continents and regions, that have begun to
grow rapidly."
Production from Russia, the Caspian, the deepwater Atlantic Basin
and Canada is up 3.3 million barrels a day (26.5 per cent) in three
years and has the potential to increase another 5 million barrels
a day by 2007.
China accounted for 68.5 per cent of the increase in global primary
energy consumption in 2002 and has become a major energy consumer
and importer. Consumption of coal, which accounts for 66 per cent
of Chinese energy use, grew a massive 27.9 per cent. Oil consumption
increased 5.8 per cent or 332,000 barrels a day, accounting for
all of the world's oil consumption growth in 2002. China replaced
Japan as the world's second largest oil consumer.
Natural gas is the world's preferred non-transport fuel. Outside
the Former Soviet Union (FSU) gas consumption has grown 3.4 per
cent a year over the past decade and its share of total energy consumption
is now roughly equal to coal at 24 per cent.
US gas consumption grew 3.9 per cent in 2002 as North American
gas production fell 1.8 per cent. Imported LNG is filling part of
the gap. Producers are now considering options for delivering new
sources of pipeline gas and LNG to this growing gas market.
Commercial (non-hydro) renewable energies are growing rapidly,
but their contribution to total world electricity generation remains
small (1.7 per cent in 2000 versus 1 per cent in 1990).
Oil - Brent oil prices averaged $25.19 a barrel in 2002, up slightly
on the 2001 average price of $24.77 and well above the post-1986
annual average of $19.40. Prices during 2002 ranged from a low of
around $18 per barrel in mid-January to peak just before the end
of the year at $32.
Global oil consumption was broadly flat, increasing 290,000 barrels
a day from 75.5 to 75.7 million barrels a day. All of the increase
is attributable to China where oil consumption increased 5.8 per
cent or 332,000 barrels a day.
Global oil production declined 415,000 barrels a day, or 0.7 per
cent, from 74.4 million to 73.9 million barrels a day. OPEC daily
oil production fell to 28.2 million barrels a day, a drop of 1.87
million barrels a day (6.4 per cent). The steep fall resulted from
a number of unplanned disruptions and because some OPEC producers,
primarily Saudi Arabia, curtailed production in response to weak
demand and to a significant 1.45 million barrel per day increase
in non-OPEC oil output.
Large daily production increases occurred in Russia (640,000 barrels),
Kazakhstan (150,000 barrels), Canada (170,000 barrels), Angola (160,000
barrels) and Brazil (160,000 barrels).
Gas - World consumption of natural gas increased in 2002 by a relatively
strong 2.8 per cent on the strength of a 3.9 per cent increase in
US consumption and a 7 per cent increase in non-OECD Asia Pacific
consumption.
Growth in natural gas consumption outpaced growth in world primary
energy and its share of total energy consumption is now roughly
equal to coal at 24 per cent.
Global natural gas production increased 1.4 per cent, from 2,493
billion cubic metres to 2,527 billion cubic metres. North America
was the only region to experience a production decline, falling
1.8 per cent from 779 to 766 billion cubic metres.
A price-driven drop in drilling activity explains some of the production
decrease, but the maturity of US and Canadian gas producing basins
was also a factor.
Coal, nuclear and hydroelectric - Coal was the fastest growing
fuel in 2002 with coal consumption increasing 6.9 per cent in 2002
on the strength of an extraordinary reported increase in China of
27.9 per cent.
Excluding China, world consumption increased just 0.6 per cent.
Consumption of nuclear power increased 1.5 per cent, with most
of the increase coming in Asia. World consumption of hydroelectric
power increased 1.3 per cent from 2001 but was still less than in
2000. Nuclear and hydroelectric power each account for about 6 per
cent of total world energy consumption.
For more information see www.bp.com.
Posted by Richard Price,
Editor Pipeline Magazine
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