OPEC expects global oil demand to increase by 16% by 2045 

The article was published by World Energy Weekly (October 30 issue), a publication of Petrostrategies, a French think-tank.

The International Energy Agency’s (IEA) comments about the “beginning of the end of fossil fuels” have provoked a strong reaction from OPEC. While the IEA will further develop its point of view in the next edition of its World Energy Outlook (WEO) in November, OPEC’s World Oil Outlook 2045 (WOO), which was published on October 9, aims to show that fossil fuels, or at least hydrocarbons, still have a bright future ahead of them.

The 2023 edition of the WOO covers the years between 2022 and 2045. During the period in question, OPEC’s reference case expects global demand for all primary energy sources to increase, with the notable exception of coal. Demand for the latter, which is currently in second place behind oil, is expected to fall to 54.4 MMboe/d in 2045 (with a share of 15.1%), as compared to 75.9 MMboe/d in 2022 (26.1%), while global primary energy demand should reach 359.2 MMtoe in 2045, as compared to 290.9 MMtoe in 2022 (+23.5%). Oil should remain in the lead until 2045 (with a share of 29.5%), while natural gas is expected to overtake coal and become the world’s second energy source, at 87 MMtoe in 2045 (24.2%), while the share of fossil fuels in demand should fall from 80% in 2022 to just 69%. This decline would be solely due to the sharp drop in coal consumption. On the other hand, the share of hydrocarbons (oil and gas) is expected to remain almost stable between 2022 (54.3%) and 2045 (53.7%). The importance of renewable energies (including hydroelectricity) in global primary energy demand in 2045 (24.5%) should be almost the same as that of natural gas at the same time, whereas their shares amounted to 14.5% in 2022.

Global oil demand is expected to reach 116 MMb/d in 2045, as compared to a level of 99.6 MMb/d in 2022. That of the OECD countries should fall from 45.9 MMb/d in 2022 to 36.7 MMb/d in 2045, while that of the non-OECD countries is expected to rise from 53.6 MMb/d to 79.4 MMb/d over the same period. The countries or regions where oil demand is expected to grow most strongly during the period covered by the WOO are: India (+6.6 MMb/d), China (+3.9 MMb/d), the rest of non-OECD Asia (+4.6 MMb/d), Africa (+3.8 MMb/d), the Middle East (+3.6 MMb/d) and Latin America (+2.6 MMb/d). And oil consumption is expected to grow most strongly in the following business sectors between 2022 and 2045: road transport (+4.6 MMb/d), petrochemicals (+4.3 MMb/d) and aviation (+4.1 MMb/d). Consumption of the following refined products is expected to show the strongest growth: jet fuels and kerosene (+4 MMb/d), ethane and liquefied petroleum gases (+3.6 MMb/d), diesel oil (+3.1 MMb/d), naphtha (+2.5 MMb/d) and gasoline (+2.5 MMb/d).

In addition to the reference case, OPEC has drawn up two more scenarios for the 2023 edition of the WOO, respectively known as “Advanced Technology” and “Laisser-faire”. The former involves the rapid deployment of CCS (carbon capture and storage) and CCUS (carbon capture, utilization and storage), as well as three other factors: direct air capture (DAC), hydrogen and the circular carbon economy. In this scenario, world oil demand in 2045 would only amount to 98 MMb/d, which is 18 MMb/d less than in the reference case. In the second scenario, the global economy would see high growth resume relatively quickly. Substantial efforts would be made in such areas as energy-efficiency and the deployment of renewable energies, but in isolation, without much international cooperation. Escalating protectionism and unilateralism would cause local development needs to be prioritized over global issues. In this scenario, oil demand would reach 122 MMb/d in 2045 (note: the rest of this article will focus on the reference case).

The supply of non-OPEC liquids, which reached 65.8 MMb/d in 2022, is expected to show a relatively small increase by 2045 (69.9 MMb/d) after peaking at 72.7 MMb/d in 2028. In the medium term, until about 2028, the following countries are expacted increase this supply: the United States (+3.4 MMb/d), Brazil, Guyana, Canada, Qatar and Norway. Production in the United States is expected to plateau towards the end of this decade, but several other countries – including Guyana, Canada, Argentina, Brazil and Kazakhstan – could potentially increase their supply beyond this date. The Americas are thus very well represented. OPEC’s supply of liquids is expected to rise sharply between 2022 (34.2 MMb/d) and 2045 (46.1 MMb/d), which would increase its share of the global supply of liquids from 34% to 40% over the same period.

Over the 2022-2045 period, oil investment requirements are estimated at $14 trillion (2023 dollars), or about $610 billion per annum. The upstream (exploration, development and production) would account for the lion’s share, with required investments of $11.1 trillion ($480 billion per annum). The rest would be shared between the downstream ($1.7 trillion) and the midstream ($1.2 trillion). OPEC is also issuing a clear warning on this point: if these investments fail to materialize, the world will face a considerable challenge, endangering both market stability and energy security.