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Aviation|Efficiency|Energy|Gas|Oil And Gas|Petrochemicals|Petroleum|Projects|Refining|Road|SECURITY|Products

Petrochemicals and jet fuel to underpin oil growth as gasoline slows

11th March 2019

By: Terence Creamer

Creamer Media Editor


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Petrochemicals and jet fuel have emerged as key drivers of oil growth, with the International Energy Agency’s (IEA’s) latest market forecast indicating that the two sectors will account for more that 30% of global growth in the coming five years, as gasoline demand slows as a result of efficiency gains and the rise of electric cars.

The agency’s ‘Oil 2019’ report, published on Monday, forecasts that demand will rise from 99.2 mb/d in 2018 to 106.4 mb/d in 2024, representing an average yearly growth rate of 1.2 mb/d, or 1.2%, and a total volume increase of 7.1 mb/d.

The IEA also sees no peak in demand, largely as a result of petrochemicals and jet-fuel growth, particularly in the US and Asia.

Growth in petrochemicals is underpinned, the publication states, by rising consumer demand, which is translating into higher plastic consumption.

Despite efforts to curb plastics use and encourage recycling, demand for plastics and petrochemicals is growing strongly, the IEA states.

“Led by the US and China, we have identified more than 50 major projects due to come onstream through 2024. These are expected to add 2.2 mb/d in oil consumption over the forecast period, accounting for 30% of global growth.”

The other major growth sector is aviation, supported by the “spectacular expansion” of air travel in recent years. The IEA expects the trend to continue, supporting a 2.1% yearly increase in demand for jet fuel, climbing to 7.2 mb/d in 2024.

Asia accounts for 75% of the increase over the forecast period, with China providing the largest increase in demand in absolute terms and India the fastest rate of growth, at 8.2% a year.

“As for gasoline, ongoing efficiency improvements will cause the global rate of growth to slow to less than 1% per year. In developing countries, however, the rate is twice as high, as rising income levels lead to more vehicles on the road.”

IEA executive director Fatih Birol says global oil markets are going through a period of “extraordinary change, with long-lasting implications on energy security and market balances throughout our forecast period to 2024”.

The US is increasingly leading the expansion in global oil supply, with significant growth also seen among other non-Organisation of the Petroleum Exporting Countries producers, including Brazil, Norway and Guyana.

The IEA described the transformation of the US from importer to major exporter within less than a decade as ““unprecedented”.

“The second wave of the US shale revolution is coming,” Birol says, noting that the US will account for 70% of the rise in global oil production and some 75% of the expansion in liquefied natural gas trade over the next five years. 

“This will shake up international oil and gas trade flows, with profound implications for the geopolitics of energy,” he says.

The US shale revolution is also altering the picture for refiners, as barrels are generally lighter and sweeter than the average crude slate, which means they require less complex refining processes to turn them into final products.

“Everywhere we look, new actors are emerging and past certainties are fading. This is the case in both the upstream and the downstream sector. And it’s particularly true for the US, by far the stand-out champion of global supply growth.”

Edited by Creamer Media Reporter



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