|Global consumption of energy, in million tonnes of oil equivalent. Click to enlarge.|
According to the just-published BP Statistical Review of World Energy 2008, the ongoing strength of world economic growth last year, despite financial market turmoil which began in August, continued to support global energy consumption. Although growth in primary energy consumption slowed in 2007 compared to 2006, at 2.4% it was still above the 10-year average for the fifth consecutive year.
Coal remained the fastest-growing fuel, but oil consumption grew slowly. Oil is still the world’s leading fuel, but has lost global market share for six consecutive years, while coal has gained market share for six years.
The defining feature of global energy markets remains high and volatile prices, reflecting a tight balance of supply and demand. This has put issues such as energy security and alternative energies at the forefront of the political agenda worldwide.—Tony Hayward, BP CEO
The oil price has been on an upward path for more than six years, which according to BP’s data series going back to 1861, is the longest period of rising prices on record.
Dated Brent crude oil averaged $72.39 per barrel in 2007, an increase of 11%. Prices rose steadily throughout the year, from a low of just over $50 in mid-January to above $96 by year-end. Temporary bottlenecks caused the USA benchmark WTI to trade at a discount to Brent for the first time since 1979. Discounts for heavy, sour crudes remained high reflecting constraints on upgrading capacity in refining.
Global oil consumption grew by 1.1% in 2007, or 1 million barrels per day (bpd), slightly below the 10-year average, according to the Review, while global oil production fell by 0.2%, or 130,000 bpd, the first decline since 2002.
Consumption in the oil exporting regions of the Middle East, South and Central America, and Africa accounted for two-thirds of the world’s growth. The Asia-Pacific region grew by 2.3%, even though growth in China and Japan was below average, with strong growth in a number of emerging economies. OECD consumption fell by 0.9%, or nearly 400,000 bpd.
OPEC production dropped by 350,000 bpd due to the cumulative impact of production cuts implemented in November 2006 and February 2007. Increased output in Angola and Iraq, and growing supply of condensates/NGLs, partially offset larger cuts in other OPEC countries.
Oil production growth outside OPEC remained weak, rising by just over 200,000 bpd in 2007; OECD output fell for a fifth consecutive year. FSU (Former Soviet Union) output rose by nearly 500,000 bpd, with Azerbaijan and Russia each growing by more than 200,000 bpd.
Proved oil reserves were essentially flat in 2007—at 1.24 trillion barrels—and are sufficient to meet current production for more than 41 years, according to BP. However, the 2006 world total was revised up by 31 billion barrels upon receipt of more complete information.
World natural gas consumption grew by an above-average 3.1% in 2007, although only North America, Asia-Pacific, and Africa recorded above average regional growth. The USA accounted for nearly half of the world’s gas consumption growth, driven by cold winter weather and strong demand for gas in power generation. Chinese consumption grew by 19.9% and accounted for the second-largest increment to global gas consumption. EU consumption declined by 1.6%—the second consecutive decline-in face of warm winter weather.
Gas production rose by 2.4% in 2007. The USA accounted for the largest increment to supply, growing by 4.3%, the strongest growth since 1984. EU production declined by 6.4%, with UK output falling by 9.5%, the world’s largest volumetric decline for a second consecutive year. A small decline in Russian production was more than offset by strong growth elsewhere in the FSU. China and Qatar recorded the second- and third-largest increments to production, increasing by 18.4% and 17.9% respectively.
LNG shipments rose by 7.3%, supported by continued growth in shipments from Qatar and Nigeria. USA LNG receipts rose by one-third as a large price premium to European spot markets resulted in the diversion of cargoes to the USA.
Other highlights of the Review include:
Coal was the fastest growing fuel in the world for the fourth consecutive year. Global consumption rose by 4.5%. Consumption growth was widespread, with growth in every region except the Middle East exceeding the 10-year average. Chinese coal consumption rose by 7.9%, the weakest growth since 2002, but more than two-thirds of global growth. Indian consumption rose by 6.6%, and OECD consumption rose by 1.3%, both above average figures.
Nuclear power output fell by 2%, the steepest decline on record. However, more than 90% of this decline was accounted for by Germany and Japan—which saw the world’s largest nuclear power plant closed following an earthquake. Hydroelectric generation increased by 1.7%, slightly below the 10-year average. Increased capacity in China and Brazil was partially offset by drought-related declines in the USA and Southern Europe.
Renewable energy remains a small share of total global energy use, but most renewable sources experienced rapid growth in 2007. Ethanol output rose by 27.8%. Global capacity for wind and solar electricity generation grew broadly in line with historical averages of 28.5% and 37%, respectively.