Growth Gap Narrows Thanks to US, China
The newly released BP Statistical Review of World Energy 2014 reveals how the world of energy echoed broader global themes in 2013. Emerging differences in global economic performance, geopolitical uncertainty and ongoing debates about the proper roles of government and markets are all reflected in its data.
Global energy demand accelerated in 2013 but, reflecting the weakness of the global economy, growth of 2.3 percent remained slightly below the historical average. Within this global picture, however, shifts in energy consumption mirrored those in the world’s economic patterns.
Energy consumption in the emerging economies grew below their long-term average rate, rising by 3.1 percent, driven by slower growth in China. However, consumption in the mature economies of the OECD grew by a higher-than-average rate of 1.2 percent entirely as a result of strong growth in the US. As a result the gap between growth in the OECD and non-OECD narrowed to levels not seen since 2000.
Nonetheless, the emerging economies continue to dominate the growth in global energy demand, accounting for 80 percent of growth last year and nearly 100 percent of growth over the past decade.
The Review – the publication’s 63rd annual edition – also illustrates how geopolitical events in a number of countries continued to impact oil production in 2013, with Libya suffering the largest single decline in the face of renewed civil unrest. Those disruptions, however, were offset by a big increase in oil production in the US – driven by the massive investment in production from shale and other ‘tight’ formations. As a net result, average oil prices remained unusually stable – albeit at levels exceeding $100 per barrel for a third consecutive year.
Speaking at the launch in Moscow, BP group chief executive Bob Dudley said: “The review again demonstrates the strength of the flexible global energy system in adapting to a changing world. The major disruptions to production seen throughout 2013 were balanced by continued rises in production elsewhere. This underlines the importance of continuing to secure these new supplies through continued access to new resources, policies to encourage markets and investment, and the application of new technologies worldwide.”
The developments also highlighted the critical importance of both policy and market forces in delivering new supplies. As BP chief economist Christof Rühl also noted, “The huge investments seen in the US have been encouraged and enabled by a favorable policy regime. And this has resulted in the US delivering the world’s largest increase in oil production last year. Indeed, the US increase in 2013 – up by 1.1 million barrels a day - was one of the biggest annual oil production increases the world has ever seen.”
Elsewhere, the impact of policy on energy was also seen in continued robust growth in renewable energy – albeit from a low base. Renewables now account for more than five percent of global power output and, including biofuels, for nearly three percent of primary energy consumption. However, the challenge of sustaining expensive subsidy regimes has become visible where penetration rates are highest, namely in the below-average growth of Europe’s leading renewable producers, who are grappling with weak economic growth and strained budgets.
Review highlights – energy developments
Global primary energy consumption increased by 2.3 percent in 2013, growing faster than in 2012 (+1.8 percent) but below the 10-year average of 2.5 percent.
All fuels except oil, nuclear power and renewables in power generation grew at below-average rates. Growth was below average for all regions except North America.
Oil remains the world’s leading fuel, with 32.9 percent of global energy consumption, but it lost market share for the 14th consecutive year and its current market share is once again the lowest in our data set, going back to 1965.
Emerging economies accounted for 80 percent of the global increase in energy consumption – even though growth in these countries was a below average 3.1 percent. OECD consumption rose by an above-average 1.2 percent.
Robust US growth (+2.9 percent) accounted for all of the net increase in the OECD and consumption in the EU and Japan fell by 0.3 percent and 0.6 percent, respectively.
Dated Brent averaged $108.66 per barrel in 2013, a decline of $3.01 per barrel from the 2012 level.
Global oil consumption grew by 1.4 million barrels per day (b/d), or 1.4 percent – just above the historical average.
Countries outside the OECD now account for the majority (51 percent) of global oil consumption and they once again accounted for all of the net growth in global consumption. OECD consumption declined by 0.4 percent, the seventh decrease in the past eight years.
The US (+400,000 b/d) recorded the largest increment to global oil consumption in 2013, outpacing Chinese growth (+390,000 b/d) for the first time since 1999.
Global oil production did not keep pace with the growth in global consumption, rising by just 560,000 b/d or 0.6 percent. The US (+1.1 million b/d) recorded the largest growth in the world and the largest annual increment in the country’s history for a second consecutive year.
The US accounted for nearly all (96 percent) of the non-OPEC output increase of 1.2 million b/d (the strongest since 2002) to reach a record 50 million b/d.
Global refinery crude runs increased by a below-average 390,000 b/d or 0.5 percent. Non-OECD countries accounted for all of the net increase, rising by 730,000 b/d.
OECD refinery throughputs declined by 340,000 b/d, the seventh decline in the past nine years despite an increase of 320,000 b/d in US refinery runs, as the US continued to ramp up net product exports.
Global oil trade in 2013 grew by 2.1 percent or 1.2 million b/d – among importers, growth in Europe and emerging economies more than offset declines in the US and Japan.
Global proved reserves of oil increased to 1687.9 billion barrels at the end of 2013, sufficient to meet 53.3 years of global production.
World natural gas consumption grew by 1.4 percent, below the historical average of 2.6 percent. As with primary energy, consumption growth was above average in the OECD countries (+1.8 percent) and below average outside the OECD (+1.1 percent).
Growth was below average in every region except North America. China (+10.8 percent) and the US (+2.4 percent) recorded the largest growth increments in the world, together accounting for 81 percent of global growth.
India (-12.2 percent) recorded the largest volumetric decline in the world, while EU gas consumption fell to the lowest level since 1999.
Globally, natural gas accounted for 23.7 percent of primary energy consumption.
Global natural gas production grew by 1.1 percent, which was well below the 10-year average of 2.6 percent.
Growth was below average in all regions except Europe and Eurasia. The US (+1.3 percent) remained the world’s leading producer, but both Russia (+2.4 percent) and China (+9.5 percent) recorded larger growth increments in 2013.
Global natural gas trade grew by 1.8 percent in 2013, well below the historical average of 5.2 percent. Pipeline shipments grew by 2.3 percent.
LNG’s share of global gas trade declined slightly to 31.4 percent – and international natural gas trade accounted for 30.9 percent of global consumption.
Global proved reserves of natural gas increased to 185.7 trillion cubic meters (tcm), sufficient to meet 54.8 years of global production.
Coal consumption grew by three percent in 2013, well below the 10-year average of 3.9 percent but it is still the fastest-growing fossil fuel.
Coal’s share of global primary energy consumption reached 30.1 percent, the highest since 1970.
Consumption outside the OECD rose by a below-average 3.7 percent, but still accounted for 89 percent of global growth.
Global nuclear output grew by 0.9 percent, the first increase since 2010. Nuclear output accounted for 4.4 percent of global energy consumption, the smallest share since 1984.
Global hydroelectric output grew by a below average 2.9 percent, and accounted for 6.7 percent of global energy consumption.
Renewable energy sources – in power generation as well as transport – continued to increase in 2013, reaching a record 2.7 percent of global energy consumption, up from 0.8 percent a decade ago.
Globally, wind energy (+20.7 percent) once again accounted for more than half of renewable power generation growth and solar power generation grew even more rapidly (+33 percent), but from a smaller base.
Global biofuels production grew by a below-average 6.1 percent (80,000 b/doe), driven by increases in the two largest producers: Brazil and the US.