Global energy: a year of ‘tectonic’ shifts

bob-dudleyBP Group chief executive Bob Dudley. (Image source: BP)The 2015 edition of the BP Statistical Review of World Energy, launched on 10 June, highlights how significant changes in global energy production and consumption have profoundly affected prices, the global fuel mix and carbon dioxide emissions

The 64th edition of the Statistical Review highlights the continuing importance of the US shale revolution, with the US overtaking Saudi Arabia as the world’s biggest oil producer and surpassing Russia as the largest producer of oil and gas.

Meanwhile, the review shows primary energy consumption has slowed markedly, with growth of just 0.9 per cent in 2014, a lower rate than at any time since the late 1990s (other than in the immediate aftermath of last decade’s financial crisis). Chinese growth in consumption slowed to its lowest level since 1998 as its economy rebalances away from energy-intensive sectors, though China remained the world’s largest growth market for energy.

Speaking at the review’s launch on 10 June, BP Group chief executive Bob Dudley said: “The eerie calm that had characterised energy markets in the few years prior to 2014 came to an abrupt end last year. However, we should not be surprised or alarmed. These events may well come to be viewed as symptomatic of a broader shifting of the tectonic plates that make up the energy landscape, with significant developments in both the supply of energy and its demand. Our task as an industry is to meet today’s challenges while continuing to invest to meet tomorrow’s demand, safely and sustainably.”

The shifts in production and consumption affected energy prices significantly. Oil prices fell sharply, largely driven by the strength of supply as non-OPEC production grew by a record amount, while OPEC maintained its output levels to maintain market share. Elsewhere, the growth of China’s coal consumption stalled and global natural gas growth was also weak due to a sharp fall in consumption, triggered by a mild European winter.

Renewables were the fastest-growing form of energy, albeit from a low base, accounting for only three per cent of primary energy.

Global carbon dioxide (CO2) emissions from energy use grew by just 0.5 per cent; the relatively slow growth largely attributable to the changing pace and pattern of Chinese economic growth.

Middle East

In relation to the Middle East, the Statistical Review highlights the relatively fast rate of growth in energy consumption; the increased share of gas in primary energy consumption; and record levels of oil production.

Energy consumption increased by 4.4 per cent in 2014, the fastest rate of any region. More than half of primary energy consumption in the region is now sourced from natural gas; its share rising to a record high 50.6 per cent, with growth driven by Iran and Saudi Arabia. However, oil consumption still rose by 260,000 bpd or 2.8 per cent, driven by strong growth in Saudi Arabia and the UAE. Consumption in the rest of the region was flat on aggregate.

Oil production in the Middle East hit a record high of 28.6mn bpd, up 360,000 bpd from the previous year. Iraq and Saudi Arabia were the largest contributors to growth, with Iraq recording its highest output since 1979 of 3.3mn bpd.

Refining capacity expanded by a record 740,000 bpd to 9.4mn bpd, due to the completion of two 400,000 bpd refineries – one in Saudi Arabia and the other in the UAE.

Oil exports from the Middle East were essentially flat at 19.8mn bpd (down -0.1 per cent), but still accounted for more than a third of global exports and more than double exports from the FSU, the next largest exporting region. Just over three quarters of Middle Eastern oil exports headed East to Asia Pacific.

Gas exports (pipeline and LNG) fell by 2.9bcm or -1.8 per cent, with Qatar remaining the largest LNG exporter at 103bcm – almost a third of global LNG exports.

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