World Oil Outlook 2012 Organization of the Petroleum Exporting Countries The data, analysis and any other information (‘Content’) contained in this publication is for infor- mational purposes only and is not intended as a substitute for advice from your business, finance, investment consultant or other professional. Whilst reasonable efforts have been made to ensure the accuracy of the Content of this publication, the OPEC Secretariat makes no warranties or represen- tations as to its accuracy, currency or comprehensiveness and assumes no liability or responsibility for any error or omission and/or for any loss arising in connection with or attributable to any action or decision taken as a result of using or relying on the Content of this publication. This publication may contain references to material(s) from third parties whose copyright must be acknowledged by obtaining necessary authorization from the copyright owner(s). The OPEC Secretariat will not be liable or responsible for any unauthorized use of third party material(s). The views expressed in this publication are those of the OPEC Secretariat and do not necessarily reflect the views of individual OPEC Member Countries. The material contained in this publication may be used and/or reproduced for educational and other non-commercial purposes without prior written permission from the OPEC Secretariat provided that the copyright holder is fully acknowledged. © OPEC Secretariat, 2012 Helferstorferstrasse 17 A-1010 Vienna, Austria www.opec.org ISBN 978-3-9502722-4-6 4 OPEC is a permanent, intergovernmental organization, established in Baghdad, Iraq, 10–14 September 1960. The Organization comprises 12 Members: Algeria, Angola, Ecuador, Islamic Republic of Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. The Organization has its headquarters in Vienna, Austria. Its objective is to coordinate and unify petroleum policies among Member Countries, in order to secure a steady income to the producing countries; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the petroleum industry. Acknowledgements Director, Research Division Hasan M Qabazard Head, Energy Studies Department Oswaldo Tapia Solis Senior Adviser Mohamed Hamel Contributors Mohammad Taeb, Mehdi Asali, Odalis Lopez Gonzalez, Benny Lubiantara, Esam Al-Khalifa, Haidar Khadadeh, Taher Najah, Julio Arboleda Larrea, Elio Rodriguez Medina, Amal Alawami, Eissa Alzerma, Mehrzad Zamani, Mohamed El-Shahati, Nadir Guerer, Garry Brennand, Aziz Yahyai, Jan Ban, Joerg Spitzy, Ralf Vogel, Douglas Linton, Pantelis Christodoulides, James Griffin, Klaus Stoeger, Martin Tallett, Petr Steiner Editors James Griffin, Alvino-Mario Fantini Senior Editing Assistant Anne Rechbach Secretarial support Khedoudja Zeghdoud, Yi Wen Huang, Marie Brearley Layout and typesetting Alaa Al-Saigh, Andrea Birnbach Additional support was provided by Hojatollah Ghanimi Fard, Ulunma Agoawike, Puguh Irawan, Ramadan Janan, Kurt Zach, Hannes Windholz, Mouhamad Moudassir, Harvir Kalirai OPEC’s Economic Commission Board Yamina Hamdi, Luís Neves, Diego Armijos-Hidalgo, Safar Ali Keramati, Adel Al-Taee, Nawal Al-Fuzaia, Imad Ben Rajab, Suleman Ademola Raji, Sultan Al-Binali, Nasser Al-Dossary, Hamdan Mubarak Al Akbari, Fadi Kabboul Contents Foreword 1 Executive summary 6 Section One Oil supply and demand outlook to 2035 22 Section Two Oil downstream outlook to 2035 142 Footnotes 248 Annexes 252 Section One Oil supply and demand outlook to 2035 Chapter 1 World oil trends: overview of the Reference Case 25 Main assumptions 25 Energy demand 46 Oil demand 55 Liquids supply 62 Upstream investment 71 CO2 emissions 71 Chapter 2 Oil demand by sector 75 Road transportation 75 Aviation 91 Rail and domestic navigation 94 Marine bunkers 96 Other sectors 97 Chapter 3 Liquids supply 109 Medium-term outlook for liquids supply 109 Long-term outlook for liquids supply 117 OPEC upstream investment 126 Chapter 4 Upstream challenges 127 Uncertainty scenarios 128 Human resources 134 Technology and R&D 135 Addressing energy poverty 137 Dialogue & cooperation 138 Section Two Oil downstream outlook to 2035 Chapter 5 Demand outlook to 2035 145 Refined product demand to 2035 145 Regional product demand to 2035 155 Product quality specifications 165 Chapter 6 Medium-term refining outlook 173 Assessment of refining capacity expansion – review of existing projects 173 Distillation capacity requirements 183 Conversion and desulphurization capacity additions 198 Chapter 7 Long-term refining outlook 205 Distillation capacity requirements 206 Conversion and desulphurization capacity additions 214 Chapter 8 Downstream investment requirements 221 Chapter 9 Oil movements 227 Crude oil movements 229 Product movements 237 Chapter 10 Downstream challenges 241 Growth shift to non-OECD regions 241 Refining capacity surplus, competition and closure 241 Declining crude oil and refining share of the incremental demand barrel 242 Distillate deficit; gasoline surplus 243 Technology responses 243 A Reference Case outlook, but many uncertainties 247 Footnotes 248 Annex A 252 Abbreviations Annex B 258 OPEC World Energy Model (OWEM): definitions of regions Annex C 266 World Oil Refining Logistics Demand (WORLD) model: definitions of regions Annex D 274 Major data sources List of boxes Box 1.1 Regulatory reform: swap derivatives market beginning to take shape Box 1.2 The Euro-zone debt crisis: one year after the 2011 Greece bailout Box 1.3 India to overtake China in economic growth Box 2.1 Natural gas for America’s highways: how long is the road? Box 3.1 Shale: on the rise, but challenges remain Box 5.1 Will LNG become an important new bunker fuel? Box 6.1 Refinery closures: down, down, down... Box 6.2 US and Canada: avoiding major refinery closures? Box 9.1 Pipeline, rail, barge...any way out! Box 10.1 Process technology developments – traditionally slow paced, but too risky to ignore List of tables Table 1.1 Real GDP growth assumptions in the medium-term Table 1.2 Population levels and growth, 2010–2035 Table 1.3 Long-term economic growth rates in the Reference Case Table 1.4 World supply of primary energy in the Reference Case Table 1.5 Medium-term oil demand outlook in the Reference Case Table 1.6 World oil demand outlook in the Reference Case Table 1.7 Medium-term liquids supply outlook in the Reference Case Table 1.8 World liquids supply outlook in the Reference Case Table 2.1 Vehicle and passenger car ownership in 2009 Table 2.2 Projections of passenger car ownership rates to 2035 Table 2.3 Commercial vehicles in the Reference Case Table 2.4 Average growth in oil use per vehicle Table 2.5 Oil demand in road transportation in the Reference Case Table 2.6 Growth in oil demand in road transportation in the Reference Case Table 2.7 Oil demand in aviation in the Reference Case Table 2.8 Growth in oil demand in aviation in the Reference Case Table 2.9 Oil demand in rail and domestic navigation in the Reference Case Table 2.10 Growth in oil demand in rail and domestic navigation in the Reference Case Table 2.11 Oil demand in marine bunkers in the Reference Case Table 2.12 Growth in oil demand in marine bunkers in the Reference Case Table 2.13 Oil demand in the petrochemical sector in the Reference Case Table 2.14 Growth in oil demand in the petrochemical sector in the Reference Case Table 2.15 Oil demand in other industry in the Reference Case Table 2.16 Growth in oil demand in other industry in the Reference Case Table 2.17 Oil demand in residential/commercial/agriculture in the Reference Case Table 2.18 Growth in oil demand in residential/commercial/agriculture in the Reference Case Table 2.19 Oil demand in electricity generation in the Reference Case Table 2.20 Growth in oil demand in electricity generation in the Reference Case Table 3.1 Non-OPEC crude oil and NGLs supply outlook in the Reference Case Table 3.2 Non-OPEC other liquids supply outlook (excluding biofuels) in the Reference Case Table 3.3 Non-OPEC biofuel supply outlook in the Reference Case Table 3.4 Estimates of world crude oil and NGLs resources Table 3.5 Non-OPEC crude oil and NGLs supply outlook in the Reference Case Table 3.6 Non-OPEC other liquids supply outlook (excluding biofuels) in the Reference Case Table 3.7 Non-OPEC biofuel supply outlook in the Reference Case Table 4.1 Oil demand in the LEG scenario Table 4.2 OPEC crude oil supply in the LEG scenario Table 4.3 Oil demand in the HEG scenario Table 4.4 OPEC crude oil supply in the HEG scenario Table 4.5 Liquids supply in the LSS scenario Table 5.1 Global product demand, shares and growth, 2011–2035 Table 5.2 Refined product demand by region Table 5.3 Expected regional gasoline sulphur content Table 5.4 Expected regional on-road diesel sulphur content Table 6.1 Distillation capacity additions from existing projects, by region Table 6.2 Estimation of secondary process additions from existing projects, 2012–2016 Table 7.1 Global demand growth and refinery distillation capacity additions by period Table 7.2 Crude unit throughputs and utilizations Table 7.3 Global capacity requirements by process, 2011–2035 List of figures Figure 1.1 OPEC Reference Basket price before and after WOO 2011 Figure 1.2 IHS CERA upstream capital and operating cost indices (UCCI and UOCI), 2000=100 Figure 1.3 Population of the world in three variants Figure 1.4 Top ten increases in population, 2010–2035 Figure 1.5 Total population by city class size Figure 1.6 Real GDP by region in 2010