Petrochemicals driving surge in oil demand: IEA

Petrochemicals are rapidly becoming the largest driver of global oil consumption, according to the International Energy Agency (IEA).

The IEA estimates there will be an incremental demand growth of 9.6 million barrels a day between 2017 to 2030. As on date, the total oil demand is 99 million barrels per day (bpd).

Of the 9.6 million bpd, 3.2 million of demand growth will come from petrochemicals. Road freight will contribute to 2.5 million bpd and aviation will drive 1.7 m bpd of demand growth.

“They are set to account for more than a third of the growth in oil demand to 2030, and nearly half to 2050, ahead of trucks, aviation and shipping. At the same time, currently dominant sources of oil demand, especially passenger vehicles, diminish in importance thanks to a combination of better fuel economy, rising public transport, alternative fuels, and electrification,” the IEA said in a report titled the future of petrochemicals.

“Petrochemicals are also poised to consume an additional 56 billion cubic metres (bcm) of natural gas by 2030, equivalent to about half of Canada’s total gas consumption today,” the report said.

Capacity additions

According to the IEA, the largest near-term capacity additions will come from countries including the People’s Republic of China and the United States of America, while the longer-term growth is led by Asia and the Middle East.

“The United States is expected to increase its global market share for ethylene (steam cracking) to 22 per cent by 2025, up from 20 per cent in 2017. Along with the Middle East, the United States has a feedstock advantage in its access to low-cost ethane owing to its abundant natural gas supplies,” the IEA said.

This advantage allows both regions to gain the lion’s share of ethane-based chemical exports in the short and medium term.

China’s coal-based methanol-to-olefins capacity is expected to double between 2017 and 2025, providing the material inputs for its large domestic manufacturing base.

“In the longer run, Asia and the Middle East both increase their market share of high-value chemical production by 10 percentage points, while the share coming from Europe and the United States decreases,” the IEA predicted.