Speaking at CERAWeek in Houston recently, Diezani Alison-Madueke, the Minister of Petroleum Resources of Nigeria and the Organization of the Petroleum Exporting Countries (OPEC) alternate president, laid out a global context for energy markets that focused on some of the challenges and uncertainties facing the economies of the world, and particularly those in developing countries.
The Minister noted that more than half of the world’s fossil fuel demand ends up in fuel tanks, thus tying demand to the transportation sector. A growing need for transportation fuel in China and India will keep a support floor under overall demand, which is expected to rise from 89 million barrels of oil per day (bopd) to 97 million bopd by 2020, and 115 million bopd by 2040, according to the U.S. Energy Information Administration (EIA).
However, there are several issues that add uncertainty to long-term projections of world energy markets, including changes in economic growth rates of countries, debt downgrades, population changes, government-driven austerity programs, and other potential issues, Alison-Madueke said.
Outside of North America, tight oil production is expected to contribute only marginally to the global supply of oil, and it is important to developing countries to acquire and exercise the financial discipline necessary to underpin development in industrial sectors to sustain economic growth.
Africa and other oil producing countries in the developing world need to shift from predominantly crude oil production to an integration of oil and gas production that emphasizes the natural resources of the country. Particular emphasis should be placed on power and industrial sectors and resources that help the economy to grow, and that fuel job growth, Alison-Madueke said.
Technological advances both increase supply and lessen demand, she said, noting that while supply in shale formations will rise on advancing technology, demand will moderate on increased transportation efficiencies, including the growing use of electric and hybrid cars, and vehicles powered by natural gas and fuel cells.
Alison-Madueke expects U.S. and Canadian tight oil production to plateau in the period between 2017 and 2019, based on information from the World Oil Outlook. A plateau in North America will result in the continued dependency in many countries for oil from the Gulf countries and Africa. Any unrest in the supplying countries will continue to affect global prices.
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