OPEC Foresees Gloom Until 2013

According to the film title "on a clear day you can see forever", but there is hardly a clear day given the devastating effects of the financial and economic crisis gripping the world. It is indeed courageous to think of the prospects in the long term at a time when no one knows what will happen. OPEC unveiled last week its World Oil Outlook 2009, a detailed annual study that has been made public for the last two years though it was an internal long-term study for a long time before.  It is prepared against the backdrop of the "massive" financial and economic crisis. In spite of governments' intervention and the "green shoots" of recovery, OPEC sees the prospects of the world economy being "gloomy" at least to 2013 where growth could be resumed after 2010 but at an average annual rate of 2.3% only and a large cumulative loss from previous expectations. Thereafter, the long-term economic growth would resume, depending on population growth and productivity development. Average world economic growth rate to 2030 is expected to be around 3% per annum, which is lower by 0.5 % from last year's study, reflecting the impact of the current crisis. There will still be wide disparity of income distribution per capita among regions in spite of the improvement in developing countries. Oil price assumptions are based on the behaviour of upstream costs and the cost of marginal liquid barrels. Energy policies, particularly the US Energy Independence and Security Act and the EU climate change and energy efficiency legislative packages, have been taken into consideration, reflecting the seriousness of policies on the oil and energy markets. Efficiency improvements and the inroads of bio-fuels and renewable energy are policies that are bound to reduce the demand for oil. Given the above assumptions, energy demand that quadrupled since 1960 is seen by the study to increase by 42% between 2007 and 2030 or from 11.1 billion tonnes of oil equivalent (BTOE) to 15.8 BTOE. Fossil fuels will still supply 80% of demand in spite of the growth from nuclear and renewable energy; oil is seen leading growth rates, followed by coal and gas. Oil demand is expected to fall in the OECD region from 47.5 million bpd in 2008 to 45.5 million bpd in 2013 and world oil demand could be lower by 5.7 million bpd in 2013 from last year's study, reflecting the crisis where most of the drop is already noticed. Further down the road, the impact of policies will be felt more and oil demand in 2030 is likely to be 106 million bpd or 7 million bpd lower than last year's study. The growth will mostly be in the developing countries and OECD demand is expected to be flat since it peaked in 2005. The transportation sector will contribute 60% of the growth, especially in middle distillates, as the car population will increase rapidly in developing countries.- Gulf News