Yemisi Izuora
The International Energy Agency, IEA, has predicted that strong global demand for oil and gas will shift in the next five years towards petrochemicals and away from motor fuels gasoline and diesel.
Demand for products ranging from fertilisers to plastics and beauty products would drive roughly a quarter of the expected oil demand growth to 2023, the IEA said in its five-year outlook.
This would bolster more anaemic growth in gasoline and diesel, also known as gasoil, as fuel efficiency and declining developed world consumption takes its toll, it said.
World oil demand is expected to rise by 6.9 million barrels per day (bpd) to 2023, or 1.2 million bpd per year, it said, with a quarter of this growth, or 1.7 million bpd, coming from demand for petrochemical feedstocks ethane and naphtha.
“Global economic growth is lifting more people into the middle class in developing countries and higher incomes mean sharply rising demand for consumer goods and services,” the IEA said.
“A large group of chemicals derived from oil and natural gas are crucial to the manufacture of many products that satisfy this rising demand,” it added.
Naphtha is made by oil refineries processing crude, but other petrochemical feedstocks – ethane or liquefied petroleum gas (LPG) – largely bypass the refining industry.
The boom in U.S. shale oil boom has dramatically expanded the availability of ethane, and a string of new projects on the U.S. Gulf Coast are underway to process it.
In total, the world is expected to add 1.4 million bpd in new petrochemical-producing steam crackers to 2023, the IEA said.
Demand for ethane would expand the fastest pace in the next five years, rising by 885,000 bpd, followed by naphtha with growth of 495,000 bpd and LPG with growth of 40,000 bpd, it said.
Jet fuel, supported by growing demand for air travel, would grow by a 1.2 percent to 2023, the IEA said.
But it said demand for gasoline and diesel would rise by 0.7 percent each, with expansion slowed by fuel efficiency standards that now cover two thirds of the world’s top car markets.
More than 80 percent of global car sales are now in markets covered by efficiency standards, including China, India the United States and Europe. The IEA said this “will impact strongly on future oil demand.”