In the medium term, global production capacity is expected to grow by 6.8 million barrels per day (b/d) by 2016. OPEC’s spare capacity as a share of global oil demand is expected to decline somewhat over the medium term as oil demand growth outpaces the growth in non-OPEC supply, according to the International Monetary Fund (IMF).
In its October 2011 “Regional Economic Outlook: Middle East and Central Asia,” the IMF noted, “Oil prices, for the most part, have continued on an upward trend since autumn 2010 amid adverse supply shocks, volatility of demand and heightened concerns about the health of advanced economies.
“Looking ahead, the projected strong growth of emerging Asia and China, and the anticipated maturing of oil fields in major producing countries have renewed concerns that oil markets may be entering a period of increased scarcity,” the report continued.
Even though the economies of oil exporting countries in the Middle East and North Africa, excluding Libya, are expected to expand by 4.9% in 2011 due to higher oil prices and production, the risk of a sharp slowdown in the U.S. and Europe could lead to slower global oil demand in 2012 and a sustained drop in oil prices, the IMF said.
For the Gulf Cooperation Council countries -- Saudi Arabia, Kuwait, the UAE, Qatar, Oman and Bahrain -- growth was projected at more than 7%. In 2011, the oil exporters' combined current account surplus is expected to increase to $334 billion (excluding Libya) from $202 billion. The GCC countries' external account surplus is expected to rise to $279 billion from $163 billion, the report stated.
The IMF said that although the oil market will be tight in the near term, there are two key reasons that might lead to some relief in the longer term.
“First, oil reserves remain significant, indicating that new oil discoveries and technology have continued to evolve at a rapid pace. Particularly telling is that despite the rapid increase in oil demand over the past decade, the ratio of proven reserves to oil consumption has actually increased.
“Second, the prospect of high oil prices is inducing oil companies to invest in upstream activities, which should lead to increases in production capacity in the long term,” IMF reported.
For natural gas, the highest increase in gas demand since 1984 was reported in 2010 of 7.4%. World consumption was 111.87 trillion cubic feet (Tcf).
“Power generation remains the main driver behind gas demand growth. Liquefied natural gas (LNG) production, mainly in Qatar, increased by 2.12 Tcf. U.S. shale gas production jumped an estimated 1.76 Tcf in 2010,” the report continued.
The events in Libya and Japan affected both supply and demand. Algeria and Russia compensated for Libya’s disruption of pipeline and LNG exports to Italy. Closures of nuclear power plants in Germany and Japan led to higher gas demand.
“Global supply will keep up with demand, while the Middle East continues to consume most of its production. Whereas the region as a whole will remain a net exporter of gas over the medium term, some countries such as Kuwait, Oman and the United Arab Emirates will continue to import gas. Saudi Arabia is neither an exporter or an importer of natural gas,” the report explained.
“Iran, the second-largest holder of proven gas reserves in the world, consumes nearly all its current annual production domestically. Other countries in the Middle East have been developing their import capacity with pipelines from Turkmenistan to Iran, LNG import terminals in Dubai and Kuwait, and interregional pipelines from Qatar to the Emirates and Oman,” the IMF reported.
“The Middle East and North Africa region will remain a key player on the supply side of both oil and gas markets, although the rapid increase in domestic energy consumption may subtract from the region’s export potential,” the report noted.
Contact the author, Scott Weeden, at sweeden@hartenergy.com.
Recommended Reading
CERAWeek: Tecpetrol CEO Touts Argentina Conventional, Unconventional Potential
2024-03-28 - Tecpetrol CEO Ricardo Markous touted Argentina’s conventional and unconventional potential saying the country’s oil production would nearly double by 2030 while LNG exports would likely evolve over three phases.
CERAWeek: Trinidad Energy Minister on LNG Restructuring, Venezuelan Gas Supply
2024-03-28 - Stuart Young, Trinidad and Tobago’s Minister of Energy, discussed with Hart Energy at CERAWeek by S&P Global, the restructuring of Atlantic LNG, the geopolitical noise around inking deals with U.S.-sanctioned Venezuela and plans to source gas from Venezuela and Suriname.
Exclusive: Chevron Balancing Low Carbon Intensity, Global Oil, Gas Needs
2024-03-28 - Colin Parfitt, president of midstream at Chevron, discusses how the company continues to grow its traditional oil and gas business while focusing on growing its new energies production, in this Hart Energy Exclusive interview.
Baltimore Port Closure Could Dent US Coal Export Volumes, EIA Says
2024-03-28 - Baltimore handled exports of 28 million short tons last year, making up 28% of total U.S. coal exports.
Vopak Consortium Selected to Operate New LNG Terminal in South Africa
2024-01-10 - Vopak, in a partnership with Transnet Pipelines, was selected to develop and operate an LNG terminal at the Port of Richards Bay in South Africa for 25 years.