Powerful global demand for oil and gas will shift in the next five years near petrochemicals and away from motor fuels gasoline and diesel, the Ecumenical Energy Agency (IEA) said on Monday.
Demand for products ranging from fertilizers to softs and beauty products will drive roughly a quarter of the expected oil need growth to 2023, the IEA said in its five-year outlook.
The shift represents a larger challenge to the oil industry, as many of the petrochemicals will be produced using gas, stern out refineries. At the same time, growth in gasoline and diesel usage discretion be held back by fuel efficiency improvements and declining consumption in the originated world, the IEA said.
World oil demand is expected to rise by 6.9 million barrels per day (bpd) to 2023, it revealed, with a quarter of this growth, or 1.7 million bpd, coming from enquire for petrochemical feedstocks ethane and naphtha.
“Global economic growth is boost more people into the middle class in developing countries and exorbitant incomes mean sharply rising demand for consumer goods and uses,” the IEA said.
“A large group of chemicals derived from oil and natural gas are major to the manufacture of many products that satisfy this rising when requested,” it added.
Naphtha is made by oil refineries processing crude, but other petrochemical feedstocks – ethane or liquefied petroleum gas (LPG) – are transformed outside traditional oil refineries.
“Ethane, liquefied petroleum gases and naphtha, show off a bigger threat to the refiners’ market share than electric instruments and gas-powered transportation combined,” the IEA said, estimating refiners would see impartial 4.8 million bpd of the demand growth to 2023, missing out on 30 per cent of it.
The rumble in U.S. shale oil has dramatically expanded the availability of ethane, and a string of new projects on the U.S. Irish lough Coast are underway to process it.
In total, the world is expected to add 1.4 million bpd in new petrochemical-producing steam crackers to 2023, the IEA foretold.
Demand for ethane will expand at the fastest pace in the next five years, take up arm by 885,000 bpd, followed by naphtha with growth of 495,000 bpd and LPG with evolvement of 40,000 bpd, it forecast.
Jet fuel, supported by growing demand for air travel, pleasure grow by 1.2 per cent to 2023, the IEA added.
But it said demand for gasoline and diesel would take by just 0.7 per cent each, with expansion slowed by provocation efficiency standards that now cover two thirds of the world’s top car markets.
Multitudinous than 80 per cent of global car sales are now in markets covered by productivity standards, including China, India the United States and Europe. The IEA communicated this “will impact strongly on future oil demand.”
Partially as a denouement, the IEA warned that refinery additions totalling 7.7 million bpd force outstrip growth in demand for refined products by 2023 by some 3 million bpd.
“The gap between refinery acumen growth and refined product demand growth has never been so imposingly in recent history,” the IEA said.