By Sebastine Obasi
The falling oil prices will probably be temporary going by the Organisation of Petroleum Exporting Countries, OPEC report just released.
The report which examined the main issues and drivers that could affect oil and energy markets in the medium to long term between 2014 and 2040, stated that while energy demand is expected to increase by 60 percent by 2040, global oil demand is expected to increase by over 21 mb/d by 2040, to reach 111 mb/d.
The developing countries’ demand is to be 67 mb/d while the Organization for Economic Co-operation and Development, or OECD, is to account for 38.2 mb/d. Rising costs, insufficient work-force and new technologies, such as advancements in drilling technology and downstream processes, will affect future demand and supply in the oil market, the outlook said.
It also explained that oil will still have the most shares in the energy mix by 2020 but coal and gas will outpace it by 2040. The cost of oil per barrel is predicted to be $110 for the rest of the decade, similar to last year’s outlook for the OPEC reference basket price — a mix of oil prices produced by OPEC members.
Real value, in 2013 prices, of oil per barrel is foreseen to be $100 by 2035 and $101.6 by 2040. Nominal prices are expected to be $157.3 by 2035 and $177.4 by 2040. Total energy supply will reach 410.2 million barrels oil equivalent per day in 2040 and oil supply is expected to rise from 81.8 mboe/d in 2010 to 99.6 mboe/d in 2040.
Although oil will still be in the lead in 2020, by 2040 coal and gas will become the leading energy supplies. “Many regions are expected to register supply increases, primarily crude oil from Latin America, mainly Brazil and Columbia, Middle East and Africa, the Caspian, Kazakhstan’s Kashagan oil field should add to robust growth, and Russia,” the outlook added.
A total of $10 trillion of investment in energy is needed by 2040. Over the medium-term, the outlook said that non-OPEC will invest over $300 billion each year while OPEC would need to invest an average of close to $40 billion annually in the remaining years of this decade, and over $60 billion annually in the longer term. The Middle East will continue to dominate oil trade with exports at 22 mb/d by 2040.
Also commenting on renewable energy, the outlook sees continued growth at a fast pace, partly as a result of government support, although their share in the global energy mix is expected to remain modest