13 June 2012 17:29 [Source: ICIS news]
By Nigel Davis
LONDON (ICIS)--The world is not structurally short of hydrocarbons but tapping into the remaining reserves, and doing so at a reasonable cost, remains the challenge, BP stressed in its latest review of world energy, released on Wednesday.
Global markets reacted remarkably well last year to the Libyan crisis and the disruption caused by the earthquake and tsunami in Japan.
Saudi Arabia, the United Arab Emirates, and Qatar, particularly, pumped more oil to help alleviate the shortfall from Libya. Gas moved from Europe to Asia, helping to mitigate the loss of nuclear power from the stricken Fukushima reactor. Coal from the US, released because of the increased availability of shale gas, helped replace gas in the European market.
Despite the rollercoaster ride, the energy statistics moved in accordance with long-term trends.
Energy consumption globally was up 2.5%, which BP’s chief economist, Christof Ruhl said, was broadly in-line with the historical average. “Emerging economies accounted for all of the net growth, with OECD demand falling [by 0.8% in 2011] for the third time in the last four years, led by a sharp decline in Japan. China alone accounted for 71% of energy consumption growth,” he added.
Underlying these broad trends however, it is not surprising to see that, in a weakened economic environment, oil demand grew by less than 1% while gas growth was 2.2%. Coal consumption grew above the average at 5.4% globally and by 8.4% in the emerging economies.
Oil’s share of the energy mix has shrunk for the past 12 years and in 2011 it was 33.2% of total energy use, or 88m bbl/day. Fast-growing coal accounted for 30.3% of global energy consumption.
The ability of the global energy markets to absorb the shocks and adjust to compensate for them shows how important open markets are.
“The ability of supply to meet demand at an affordable price depends on two things- markets and infrastructure,” BP CEO Bob Dudley said. “The open market is something that governments provide – while the infrastructure is largely something industry provides.”
Competition helps suppliers build infrastructure and develop the technology to exploit some of the less easy to reach hydrocarbon resources. Shale gas in the US, the supply of which has boomed in a free market environment, is a case in point.
“The good news today is that we’re seeing whole range of areas where this process of competition, innovation and growth is generating results," Dudley said. "These include shale gas; deepwater oil and gas; heavy oil; and, potentially, advanced biofuels."
"As we have often said, the challenges lie more above the ground than beneath it.”Read Paul Hodges’ Chemicals and the Economy blog
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