The 2017 edition of the BP Statistical Review of World Energy, published today, shows global energy markets continuing to undergo long-term changes as they also adapt to nearer-term price challenges.
Data published in the Review – the 66th annual edition – clearly demonstrate the long-term transitions now underway in the markets, with a shift to slower growth in global energy demand, demand moving strongly towards the fast-growing developing economies of Asia, and a marked shift towards lower carbon fuels as renewable energy continues to grow strongly and coal use falls.
At the same time, energy markets are adjusting effectively to nearer-term challenges, with the oil market in particular adjusting in 2016 to the oversupply that has dominated the market in recent years.
Introducing the Review, Bob Dudley, BP Group Chief Executive, said: “Global energy markets are in transition. The longer-term trends we can see in this data are changing the patterns of demand and the mix of supply as the world works to meet the challenge of supplying the energy it needs while also reducing carbon emissions. At the same time markets are responding to shorter-run run factors, most notably the oversupply that has weighed on oil prices for the past three years.
“To understand these forces at work and their implications for the future, we need timely, reliable data. This is why we produce the Statistical Review – to provide the accurate global information that will contribute to discussion, debate and informed decision-making around the world.”
In 2016 global energy demand was weak for the third consecutive year, growing by just 1%, around half the average growth rate of the past decade. Once again, almost all this growth came from fast-growing developing economies, with China and India together accounting for half of all growth.
The year’s low prices drove demand for oil higher by 1.6% while growth in production was limited to only 0.5%. As a result, the oil market returned broadly back into balance by mid-year, but prices continued to be depressed by the large overhang of built-up inventories. Natural gas production was also adversely affected by low prices, growing by only 0.3%. US gas output fell in 2016, the first reduction since the advent of the shale revolution in the mid-2000s.
Renewables were again the fastest growing of all energy sources, rising by 12%. Although providing still only 4% of total primary energy, the growth in renewables represented almost a third of the total growth in energy demand in 2016. In contrast, use of coal – the most carbon-intensive of the fossil fuels – fell steeply for a second year, down by 1.7%, primarily due to falling demand from both the US and China.
The combination of weak energy demand growth and the shifting fuel mix meant that global carbon emissions are estimated to have grown by only 0.1% – making 2016 the third consecutive year of flat or falling emissions. This marks the lowest three-year average for emissions growth since 1981-83.
Bob Dudley commented: “While welcome, it is not yet clear how much of this break from the past is structural and will persist. We need to keep up our focus and efforts on reducing carbon emissions. BP supports the aims set out in the COP21 Paris meetings and is committed to playing our part to help achieve them.”
Global energy demand grew by 1% in 2016 – similar to rises of 0.9% and 1% seen in 2015 and 2014 respectively and significantly lower than the 10-year average rate of growth of 1.8%.
Almost all growth came from fast-growing developing economies; China and India together accounted for around half of all growth.
Indian energy demand grew by 5.4%, a similar rate to that seen in recent years.
Chinese energy demand, however, grew by 1.3%. This is close to the 1.2% rise in energy demand in 2015 and around a quarter of its 10-year average growth. Average growth during 2015 and 2016 was the lowest over a two-year period since 1997-98. Despite this slowing, the incremental increase in demand in China made it the world’s largest energy growth market for the 16th consecutive year.
Demand from the developed OECD countries remained essentially flat (rising just 0.2%).
Dated Brent averaged $44 a barrel in 2016, down from $52 in 2015 and the lowest annual average price since 2004.
Global oil consumption grew strongly, rising by 1.6%, or 1.6 million barrels a day (mmb/d), above the 10-year average rate for a second consecutive year. Strong increases in demand were seen from India (up 0.3mmb/d) and Europe (up 0.3mmb/d) and while demand from China continued to grow (up 0.4mmb/d) it was lower than in recent years.
Weak prices impacted the growth of global oil production which rose by just 0.5% – the lowest increase since 2009 – or 0.4mmb/d.
Within this total, production from OPEC increased by 1.2mmb/d, with significant increases seen from Iran (up 0.7mmb/d), Iraq (up 0.4mmb/d) and Saudi Arabia (up 0.4mmb/d).
In contrast, non-OPEC oil production fell by 0.8mmb/d, the biggest annual decline for around 25 years. The largest output falls were from the US (down 0.4mmb/d), China and Nigeria (each down 0.3mmbd).
Global natural gas consumption rose by 1.5% in 2016, slower than the 10-year average rate of 2.3%. However, there were strong increases in gas consumption in Europe (up 6%), the Middle East (up 3.5%) and China (up 7.7%).
Global natural gas production rose by only 0.3% – the weakest growth in gas output for 34 years, outside the financial crisis. With lower gas prices, US gas production fell for the first time since the shale gas revolution began. Australian gas production rose significantly as new LNG facilities came on stream.
Global LNG imports/exports grew by 6.2%, driven by the new Australian output. LNG production is expected to grow by around 30% in next three years as further new projects come on line.
The rise of LNG trade reflects an ongoing continuing fundamental shift in global gas markets towards greater integration, but also towards more competitive and flexible markets – with increasing volumes of LNG under shorter or smaller contracts or uncontracted.
Global coal consumption fell for the second successive year, down by 1.7% or 53 million tonnes of oil equivalent (Mtoe). This decline brought coal’s share of primary energy production to 28.1%, its lowest share since 2004.
Declining consumption was driven primarily by the US (down 8.8%, 33Mtoe), and China (down 1.6%, 26Mtoe)
World coal production fell by 6.2% or 231Mtoe, the largest annual decline on record. The falls in production were again driven by China (down 7.9% or 140Mtoe) and the US (down 19%, or 85Mtoe).
In the UK, coal consumption more than halved (-52.5%). UK coal consumption has now fallen to levels last seen at the start of the Industrial Revolution around 200 years ago. The UK power sector recorded its first ‘coal-free’ day in April 2017.
Once again, renewables were the fastest growing energy source in 2016. Not including hydroelectric power, renewable energy grew by 12%. While below the 10-year average rate of growth for renewables of 15.7%, this still represented the largest annual incremental increase in output on record (an increase of 55Mtoe – more than the decline in coal consumption).
Renewables now provide a share of just under 4% of primary energy.
More than half of growth in renewable power came from wind, which rose by 16% in the year. Solar energy grew by 30%. Despite solar energy making up only 18% of renewables output, growth in solar represented around a third of the overall growth in renewable power.
In 2016, China became the world’s largest single producer of renewable power, overtaking the US, and Asia Pacific overtook Europe & Eurasia to become the largest producing region for renewable power.
Nuclear power generation grew by 1.3%, or 9.3Mtoe, in 2016. A 24.5% annual increase in Chinese nuclear output accounted for all the net growth in nuclear power. China’s incremental increase of 9.6Mtoe was the largest from any country since 2004.
Hydroelectric power generation increased by 2.8% in 2016 – rising by 27.1Mtoe. The largest incremental growth again came from China and then the US.