World Oil Outlook 2011 World Oil Outlook OPEC 2011 OPEC Secretariat Helferstorferstrasse 17 A-1010 Vienna, Austria www.opec.org ISBN 978-3-9502722-2-2 Organization of the Petroleum Exporting Countries World Oil Outlook 2011 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, 2011 Helferstorferstrasse 17 A-1010 Vienna, Austria www.opec.org ISBN 978-3-9502722-2-2 2 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 Project coordinator Oswaldo Tapia Solis, Head, Energy Studies Department Senior Adviser Mohamed Hamel Contributors Brahim Aklil, Mohammad Taeb, Mohammad Khesali, Mohammad Mazraati, Benny Lubiantara, Esam Al-Khalifa, Haidar Khadadeh, Taher Najah, Julio Arboleda Larrea, Elio Rodriguez Medina, Amal Alawami, Nadir Guerer, Garry Brennand, Jan Ban, Joerg Spitzy, Douglas Linton, James Griffin, Fuad Siala, Martin Tallett, Petr Steiner, Ula Szalkowska Editor James Griffin Senior Editing Assistant Anne Rechbach Secretarial support Vivien Pilles-Broadley, Khedoudja Zeghdoud, Yi Wen Huang, Marie Brearley Art designer Alaa Al-Saigh Typesetting Anne Rechbach, Andrea Birnbach Additional support was provided by Fuad Al-Zayer, Hojatollah Ghanimi Fard, Ulunma Agoawike, Puguh Irawan, Ramadan Janan, Aziz Yahyai, Kurt Zach, Pantelis Christodoulides, Steve Hughes, Hannes Windholz, Mouhamad Moudassir, Klaus Stoeger, 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, Ahmad Al-Ghamdi, Hamdan Mubarak Al Akbari, Fadi Kabboul Contents Foreword 1 Executive summary 5 Section One Oil supply and demand outlook to 2035 22 Section Two Oil downstream outlook to 2035 150 Footnotes 248 Annexes 254 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 49 Oil demand 59 Oil supply 65 Upstream investment 73 CO2 emissions 74 Chapter 2 Oil demand by sector 77 Road transportation 78 Aviation 92 Rail and domestic waterways 95 Other sectors 98 Chapter 3 Oil supply 113 Medium-term non-OPEC crude and NGLs 113 Long-term non-OPEC crude and NGLs 118 Non-conventional oil (excluding biofuels) 121 Biofuels 125 OPEC upstream investment activity 127 Chapter 4 Upstream challenges 129 Accelerated Transportation Technology and Policy scenario (ATTP) 129 Uncertainties over economic growth 134 Adverse impacts of climate change mitigation response measures 139 Energy poverty 142 Human resources 143 Energy and water 144 Technology and R&D 146 Dialogue & cooperation 148 Section Two Oil downstream outlook to 2035 Chapter 5 Oil demand by product 153 Chapter 6 Distillation capacity requirements 169 Assessment of refining capacity expansion – review of existing projects 169 Capacity additions 179 Medium-term outlook 184 Long-term outlook 191 Chapter 7 Conversion and desulphurization capacity additions 199 Crude quality 199 Products quality specifications 202 Capacity requirements 210 Crude and product differentials 218 Chapter 8 Downstream investment requirements 223 Chapter 9 Oil movements 229 Crude oil 230 Products 237 Chapter 10 Downstream challenges 243 A new downstream outlook 243 Declining crude oil and refining share of the incremental demand barrel 243 Capacity expansion competition – and closure 244 Distillate deficit; gasoline surplus 245 Demand and technology responses? 245 Refining investments: trends and uncertainties 246 Footnotes 248 Annex A 254 Abbreviations Annex B 262 OPEC World Energy Model (OWEM): definitions of regions Annex C 270 World Oil Refining Logistics Demand (WORLD) model: definitions of regions Annex D 278 Major data sources List of boxes Box 1.1 Regulatory reform in the energy derivative markets Box 1.2 Costs and long-term price assumptions Box 1.3 Economic recovery: sustainable at current rates? Box 1.4 Energy and China’s 12th Five Year Plan Box 1.5 Shale gas: recent developments Box 1.6 After Fukushima: unclear for nuclear Box 2.1 Road transportation technology: where are the wheels turning? Box 3.1 Shale oil: more than just marginal additions? Box 5.1 Europe: taxing times for diesel? Box 5.2 IMO bunker fuel regulation: overview of regulatory changes Box 6.1 Russia’s oil exports tax dilemma: crude or products? Box 6.2 Outlook for refinery closures: what’s next? Box 7.1 Are boutique fuels emerging in Europe? Box 9.1 It’s in the pipeline List of tables Table 1.1 Real GDP growth assumptions in the medium-term Table 1.2 Population levels and growth Table 1.3 Population by urban/rural classification Table 1.4 Long-term economic growth rates in the Reference Case Table 1.5 World supply of primary energy in the Reference Case Table 1.6 Medium-term Reference Case oil demand outlook Table 1.7 World oil demand outlook in the Reference Case Table 1.8 Medium-term oil supply outlook in the Reference Case Table 1.9 World oil supply outlook in the Reference Case Table 2.1 Vehicle and passenger car ownership in 2008 Table 2.2 Projections of passenger car ownership to 2035 Table 2.3 The volume of 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 Passenger kilometres flown Table 2.8 Aviation oil demand in the Reference Case Table 2.9 Growth in aviation oil demand in the Reference Case Table 2.10 Oil demand in rail and domestic waterways in the Reference Case Table 2.11 Growth in oil demand in rail and domestic waterways in the Reference Case Table 2.12 Oil demand in marine bunkers in the Reference Case Table 2.13 Oil demand growth in marine bunkers in the Reference Case Table 2.14 Oil demand in the petrochemical sector in the Reference Case Table 2.15 Growth in oil demand in the petrochemical sector in the Reference Case Table 2.16 Oil demand in other industry in the Reference Case Table 2.17 Oil demand growth in other industry in the Reference Case Table 2.18 Oil demand in residential/commercial/agriculture in the Reference Case Table 2.19 Oil demand growth in residential/commercial/agriculture in the Reference Case Table 2.20 Oil demand in electricity generation in the Reference Case Table 2.21 Oil demand growth in electricity generation in the Reference Case Table 3.1 Medium-term non-OPEC crude oil and NGLs supply outlook in the Reference Case Table 3.2 Estimates of world crude oil and NGLs resources Table 3.3 Non-OPEC crude oil and NGLs supply outlook in the Reference Case Table 3.4 Medium-term non-OPEC non-conventional oil supply outlook (excluding biofuels) in the Reference Case Table 3.5 Long-term non-OPEC non-conventional oil supply outlook (excluding biofuels) in the Reference Case Table 3.6 Medium-term non-OPEC biofuel supply outlook in the Reference Case Table 3.7 Long-term non-OPEC biofuel supply outlook in the Reference Case Table 4.1 Oil demand in the ATTP scenario Table 4.2 OPEC crude and non-OPEC supply in the ATTP scenario Table 4.3 World oil demand in the lower economic growth scenario Table 4.4 Oil supply in the lower economic growth scenario Table 4.5 World oil demand in the higher economic growth scenario Table 4.6 Oil supply in the higher economic growth scenario Table 4.7 Characteristics of stabilization scenarios Table 5.1 Global product demand, shares and growth, 2010–2035 Table 5.2 Product demand by region Table 6.1 Estimation of secondary process additions from existing projects, 2011–2015 Table 6.2 Global demand