IEA-IEF-OPEC Outlook Comparison Richard Newell, Director, Duke University Energy Initiative Gendell Professor of Energy and Environmental Economics, Nicholas School of the Environment Sixth IEA-IEF-OPEC Symposium on Energy Outlooks February 16, 2016 | Riyadh, Saudi Arabia
Overview • Highlights from comparison of recent IEA and OPEC outlooks – Recent progress on data quality and comparability – Baseline 2014 liquids data – Global liquids demand outlook – Global liquids supply outlook – Oil price assumptions • IEA and OPEC in the context of other long-term outlooks • This presentation focuses on differences, but similarities of approach and results are far more common • IEA-IEF-OPEC Technical Meeting tomorrow to discuss opportunities for improved comparability 2 Richard Newell, February 16, 2016, Riyadh
IEA and OPEC outlooks covered in the report IEA OPEC Report type Report name Publication date Report name Publication date Monthly Oil Oil Market Short-term Dec. 2015 Market Report Dec. 2015 Report (OMR) (MOMR) Medium-Term Oil Market World Oil Outlook Medium-term Feb. 2015 Dec. 2015 Report (WOO2014) (MTOMR) World Energy World Oil Outlook Long-term Nov. 2015 Dec. 2015 Outlook (WEO) (WOO) 3 Richard Newell, February 16, 2016, Riyadh
Examples of recent progress on data quality and comparability of outlooks Both IEA and OPEC used same baseline years for long-term projections in the outlook, enabling better comparisons. Both IEA and OPEC agreed to share and review more historical baseline data for the years 2008 to 2013 for the regions where apparent differences are the largest: Non-OECD Asia (outside of China) and the Former Soviet Union (FSU). OPEC disaggregated OPEC Member Countries into geographical regions in OPEC long-term liquids demand projections, allowing a more direct comparison with IEA. 4 Richard Newell, February 16, 2016, Riyadh
Baseline 2014 liquids data 5 Richard Newell, February 16, 2016, Riyadh
1.5 mb/d difference between IEA and OPEC in 2014 baseline data is due to differences in non-OECD nations, particularly Asia outside of China Difference 2014 liquids demand (mb/d) IEA OPEC (IEA-OPEC) Total OECD 45.7 45.7 0.0 OECD Americas 24.1 24.2 -0.1 OECD Europe 13.4 13.4 0.0 Asia Oceania 8.2 8.2 0.0 Total Non-OECD 47.1 45.6 1.5 Asia 22.6 21.9 0.7 China 10.6 10.5 0.1 Other non-OECD Asia 12 11.4 0.6 Middle East 8 8.1 -0.1 Latin America 6.8 6.6 0.2 FSU 4.9 4.5 0.4 Non-OECD Europe 0.7 0.7 0.0 Africa 4 3.8 0.2 World 92.8 91.4 1.5 6 Richard Newell, February 16, 2016, Riyadh
1.3 mb/d difference in 2014 IEA-OPEC liquids supply associated with FSU & OPEC supply Difference 2014 liquids supply (mb/d) IEA OPEC (IEA-OPEC) Total OECD 24.2 24.2 0.0 OECD Americas 20.0 20.1 0.0 OECD Europe 3.6 3.6 0.0 Asia Oceania 0.5 0.5 0.0 Total Non-OECD 30.5 30.2 0.4 Non-OECD Asia 7.9 7.8 0.1 China 4.2 4.3 0.0 Other non-OECD Asia 3.6 3.5 0.2 Middle East 1.3 1.3 0.0 Latin America 5.0 5.0 0.0 FSU 13.9 13.6 0.4 Non-OECD Europe 0.1 0.1 0.0 Africa 2.3 2.4 -0.1 Processing gains 2.2 2.2 0.0 Total Non-OPEC 57.0 56.5 0.5 Total OPEC 36.6 35.9 0.8 OPEC crude 30.3 30.1 0.2 OPEC NGLs + unconventionals 6.4 5.8 0.6 World 93.7 92.4 1.3 7 Richard Newell, February 16, 2016, Riyadh
A 1.5 mb/d difference in base year 2014 liquids demand contributes a significant portion of demand forecast differences for IEA-OPEC Short-term world liquids demand mb/d 97 96 95.8 1.7 95 94.6 94 94.1 1.7 93 92.9 92.8 1.5 92 91 91.3 90 89 2014 2015 2016 IEA OPEC 8 Richard Newell, February 16, 2016, Riyadh
Global liquids demand outlook 9 Richard Newell, February 16, 2016, Riyadh
IEA and OPEC adjusted liquids demand growth upward during 2015 from 0.9-1.0 mb/d to 1.6-1.8 mb/d, mostly in OECD countries Revisions of 2015 liquids demand growth forecasts mb/d 2.5 2.0 IEA (World) OPEC (World) 1.5 IEA (Total Non-OECD) OPEC (Total Non-OECD) 1.0 IEA (Total OECD) 0.5 OPEC (Total OECD) 0.0 -0.5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 10 Richard Newell, February 16, 2016, Riyadh
Medium-term demand projection difference mainly comes from Non-OECD regions mb/d (a) World liquids demand 100 IEA 98 OPEC 96 94 92 90 88 2014 2015 2016 2017 2018 2019 2020 mb/d (b) OECD and Non-OECD liquids demand IEA (Non-OECD) 54 52 OPEC (Non-OECD) 50 48 46 OPEC (OECD) IEA (OECD) 44 42 2014 2015 2016 2017 2018 2019 2020 11 Richard Newell, February 16, 2016, Riyadh
Long-term liquids demand projections vary widely, yet OPEC Reference and IEA New Policy scenarios are within 1 mb/d in 2040 World liquids demand projections in various scenarios mb/d 125 IEA Current Policies 120 115 OPEC HEG OPEC Reference 110 IEA New Policies 105 OPEC LEG 100 95 90 IEA 450 ppm 85 80 2030 2040 2014 2020 12 Richard Newell, February 16, 2016, Riyadh
Global liquids supply outlook 13 Richard Newell, February 16, 2016, Riyadh
Non-OPEC liquids supply growth forecast for 2015 initially dipped, then recovered Revisions of liquids supply forecasts for 2015 mb/d 1.4 IEA (Total Non-OPEC) 1.2 OPEC (Total 1.0 Non-OPEC) 0.8 IEA (OECD) OPEC (OECD) 0.6 0.4 IEA (Non-OECD) OPEC (Non-OECD) 0.2 0.0 -0.2 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 14 Richard Newell, February 16, 2016, Riyadh
Short-term IEA and OPEC forecasts for 2016 show slowing non- OPEC liquids supply growth turning negative Non-OPEC liquids supply annual growth mb/d 2.8 2.4 2.4 2.2 2.0 1.6 1.4 1.3 1.3 1.2 1 0.8 0.4 2016 0.0 2013 2014 2015 -0.4 -0.4 -0.6 -0.8 IEA OPEC 15 Richard Newell, February 16, 2016, Riyadh
Short-term liquids supply growth is led by OPEC crude, while OECD Americas supply declines in 2016 Short-term liquids supply net annual growth forecasts mb/d 2.0 1.8 1.5 1.6 1.3 1.2 1.2 0.8 0.4 0.0 -0.4 -0.8 IEA OPEC IEA OPEC 2015 2016 Processing gains OPEC crude OPEC NGLs + unconventionals Non-OECD Other OECD OECD Americas World 16 Richard Newell, February 16, 2016, Riyadh
Medium term Non-OPEC liquids supply growth forecasts still show continued growth mb/d (a) IEA Outlook 1.0 0.7 0.7 0.8 0.6 0.5 0.5 0.6 0.4 0.4 0.2 0.0 -0.2 Processing gains -0.4 Other Non-OECD 2015 2016 2017 2018 2019 2020 Europe & Eurasia L. America (b) OPEC Outlook mb/d Other OECD 0.9 1.0 OECD Americas 0.7 0.8 0.8 Total Non-OPEC 0.5 0.6 0.4 0.3 0.4 0.2 0.0 -0.2 -0.4 2015 2016 2017 2018 2019 2020 17 Richard Newell, February 16, 2016, Riyadh
Long-term oil supply scenarios vary widely, yet similar projections for OPEC Reference and IEA New Policies scenarios 2040 liquids supply outlooks in different scenarios mb/d 140 122 115 120 110 110 13 102 9 10 13 100 9 88 44 9 45 80 41 39 34 28 60 40 65 60 60 60 58 51 20 0 450 ppm New Policies Current Low Economic Reference High Scenario Scenario Policies Growth Case Economic Scenario Growth IEA OPEC OPEC NGLs + unconventionals OPEC crude (incl. Venezuela extra heavy) Non-OPEC 18 Richard Newell, February 16, 2016, Riyadh
Oil price assumptions 19 Richard Newell, February 16, 2016, Riyadh
Medium-term price assumptions are similar until they begin to diverge somewhat in 2019 Medium-term oil price assumptions (nominal US$) $/bbl ← History Assumption → 120 100 80 60 40 20 0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 OPEC reference basket Brent history / IEA average import price assumption 20 Richard Newell, February 16, 2016, Riyadh
IEA’s long -term oil price assumptions are substantially higher than OPEC’s Long-term oil price assumptions (real 2014 US$) $/bbl 160 150 140 128 120 95 95 100 83 80 77 80 71 60 40 20 0 2020 2040 21 Richard Newell, February 16, 2016, Riyadh
Key remaining challenges in comparing IEA and OPEC energy outlooks • Different units (mb/d, mboe/d, mtoe), and sometimes unclear conversion factors between units • Different treatment of biofuels/bunkers within global versus regional liquids supply • Different liquids categorization: e.g., definition of “crude oil” • Different regional groupings, in particular separate OPEC treatment of member country demand in medium-term projections • Different conception of “central” policy scenarios • Oil price assumptions 22 Richard Newell, February 16, 2016, Riyadh
IEA and OPEC in the context of other long-term energy outlooks 23 Richard Newell, February 16, 2016, Riyadh
Challenges in comparing IEA and OPEC projections to other energy outlooks • Some challenges similar to comparison of IEA and OPEC – Different primary energy units and fuel-specific physical units – Different categorization of biofuels and renewable power – Different regional groupings – Different assumptions for policy and about economic growth • Plus, several additional challenges – Assumptions about energy content of fossil fuels can vary by 2-12% – Different conversion factors for renewables and nuclear can alter primary energy estimates for these sources by -65% to +153% – Omission of traditional non-marketed biomass by U.S. EIA and BP leads to primary energy consumption estimates that are 10-14% lower than other outlooks 24 Richard Newell, February 16, 2016, Riyadh
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