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World Oil Outlook

Start video at 26:04

https://www.c-span.org/video/?420074-1/opec-officials-hess-ceo-john-hess-discuss-global-oil-outlook

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>> THANK YOU. GOOD MORNING EVERYONE. IT'S A GREAT PLEASURE TO BE HERE PRESENTING TO YOU THE 2016 POSITION OF THE WORLD OUTLOOK TENTH EDITION

I'M ONE OF THE MAIN AUTHOR'S OF THE REPORT...

SO LET ME START BY SAYING THAT THE WORLD OUTLOOK PROVIDE ANALYSIS ON MANY ASPECTS, MANY ISSUES THAT ARE AFFECTING OUR INDUSTRY. HOWEVER, IN THIS PRESENTATION I WANT TO FOCUS ON FOUR MAIN QUESTIONS WHERE THE OUTLOOK SHEDS LIGHT.

• THE FIRST IS SOCIAL ECONOMIC OUTLOOK HOW IT WILL EVOLVE AFTER 2040.

• THEN WE FOCUS ON THE ENERGY OUTLOOK AND WE EXPLORE HOW WE WOULD EVOLVE INTO THE LONG-TERM.

• WE ALSO PROVIDE VERY GRADUAL ANALYSIS IN MATERIALS OF THE OIL MARKETS OUTLOOK UP TO 2040.

• AND FINALLY A NEW PIECE OF ANALYZE IN THIS YEAR'S OUTLOOK HOW COULD FUTURE ENERGY POLICY CHANGES AFFECT THE ENERGY OUTLOOK.

AFTER THE PARIS CLIMATE AGREEMENT THERE'S STILL A LOT OF UNCERTAINTY ON HOW POLICY, ENERGY POLICIES WOULD HAVE EVOLVED IN THE FUTURE.

WHAT WOULD BE THE POLICY SO THAT OUTLOOK PROVIDE HOW THIS COULD AFFECT THE ENERGY OUTLOOK. SO LET ME START WITH THIS SOCIAL ECONOMIC OUTLOOK UP TO 2040 AND SOCIAL ECONOMIC HAD CLEAR COMPLIX ON THE OIL DEMAND EVOLUTION.

SO FOR MAIN DEMOGRAPHIC CHANGES IN THE WORLD WHEN WE LOOK INTO THE LONG-TERM, FIRST ONE IS THAT WORLD POPULATION WILL GROW. CURRENTLY, WE ARE 7.3 BILLION PEOPLE AND UP TO 2040, WE WILL BE 9.1 BILLION. THAT'S AN ADDITION OF 1.8 BILLION PEOPLE AND WHAT I THINK IS MORE IMPORTANT IS THAT MOST OF THAT GROWTH WILL BE COMING FROM DEVELOPING COUNTRIES.

SECOND SOCIODEMOGRAPHIC CHANGE THE AVERAGE GROWTH STARTED TO ACCELERATE, WHILE BETWEEN 2010 AND 2010 AND 2020 THE WORLD ADDED 800 MILLION PEOPLE DURING THE LAST DECADE OF THE MEMBER DECLINE TO 600 MILLION PEOPLE. SO IMPORTANT CHANGE INTO THE FUTURE HERE.

THIRD IMPORTANT IS OVERALL THE AGE, STRUCTURE OF THE POPULATION IS AGING AND GOOD EXAMPLE HERE THE POPULATION AGE 65 OR MORE CURRENTLY COMES FOR 8% OF THE WORLD IN 2040 THIS ACCOUNTS FOR 18 POPULATION AND OF COURSE IT WILL SHRINK SLIGHTLY,

AND FINALLY MORE SOCIODEMOGRAPHIC CHANGE IS THAT THE WORLD IS COMING TO TOWN. YOUR PROCESS CONTINUES, CURRENTLY 54% OF THE PEOPLE ARE LIVING IN URBAN AREAS INTO THE FUTURE 2040 WE'RE EXPECTED THESE NUMBER WILL INCREASE TO 63%.

THE NUMBERS ARE GETTING LARGER AND NUMBER OF MEGA CITY WHICH ARE CITIES WITH MORE THAN 10 MILLION PEOPLE WILL INCREASE FROM 29 TO MORE THAN 40 MEGA CITIES IN THE WORLD.

THIS OF COURSE IS FOR IMPORTANT QUESTION FOR POLICYMAKERS IN THE CITIES. BUT WILL ALSO BE IMPORTANT CHANGE FRONT SEAT ECONOMIC POINT OF VIEW AND KEY TAKE AWAY HERE IS THAT THE GLOBAL ECONOMIC PICTURE WILL RESHUFFLE.

THE WORLD GDP DOUBLES BETWEEN 2015 AND 2040 AND WHAT IS EVEN MORE IMPORTANT IS THAT WHERE GROWTH IS COMING FROM, IN FACT, THREE QUARTERS OF THE ADDITIONAL GDP BETWEEN 2015 AND 2040 WILL COME FROM THE DEVELOPING COUNTRIES. AND HERE, WE CANNOT OVEREMPHASIZE THE IMPORTANTANCE OF CHINA AND INDIA TOGETHER. THEY CURRENTLY COUNT FOR 24% OF THE WORLD GDP IN 2040 THEIR SHARE COMBINED AND 40% OR SO OF THE WORLD IN 2040 WILL BE CHINA AND INDIA.

ALSO WE WANT TO EMPHASIZE THE FACT THAT AVERAGE INCOME LEVEL IN THE WORLD WILL INCREASE AND ALLOW MILLIONS OF PEOPLE TO EXIT POVERTY AND JOIN THE MIDDLE-CLASS. THAT INCOME GAP REMAINS QUITE IMPORTANT -- THE AVERAGE INCOME LEVEL IN THE REGIONS VERSUS POOREST REGION -- GAP REMAINS QUITE WIDE.

NOW, LET'S ZOOM IN A LITTLE BIT ON THE ENERGY OUTLOOK UP TO 2040, AND THE KEY TAKE AWAY HERE IS THAT ENERGY DEMAND WILL INCREASE BY 40% BETWEEN 2014 AND 2040.

YOU CAN SEE ON THE TABLE THAT IN 2014 DEMAND WAS 274 MILLION BARRELS -- IN 2040 WE EXPECT THAT THAT NUMBER WILL BE 382 MILLION BARRELS. THAT'S AN AVERAGE GROWTH OF 1.3% PER. AND MOST OF THESE GROWTHS BY SURPRISE WILL BE COMING FROM THE DEVELOPING COUNTRIES WITH WITH AN AVERAGE GROWTH OF 2.1%, AND THE SECOND GRAPH YOU CAN SEE THAT AVERAGE GROWTH FOR SOME SPECIFIC REGION IS WHAT IS IMPORTANT. YOU CAN SEE INDIA, THE AVERAGE GROWTH OF ENERGY DEMAND IS OVER 3.3% PER ANIMAL IN TERMS OF ENERGY DEMAND FOR THE REGION, WE EXPECT QUITE LOW GROWTH ACTUALLY -- ENERGY DEMAND PEAKING AROUND 2030 AND DECLINE ON BACK OF OTHER ENERGY POLICIES, OF COURSE. THAT IS FROM THE REGIONAL POINT OF VIEW FROM THE FUEL POINT OF VIEW, THE MESSAGE IS QUITE CLEAR. THE SHIFT FROM FOSSIL FUEL TO RENEWABLE IS EXPECTED TO CONTINUE. HOWEVER, FOSSIL FUELS REMAIN AND CONTINUE TO DOMINATE ENERGY MEEK ACCOUNTING FOR 77% OF THE MEEK. HOWEVER, THE FAST GROWTH OF OIL RENEWABLE THAT'S WHAT HAD INCLUDES WIND AND SOLAR WILL START TO KICK IN SIGNIFICANTLY. IN PARTICULAR FOR OIL, MOST IT WILL REMAIN AS A MOST IMPORTANT FUEL UNTIL THE LATE 30s WHEN IT IS OVERTAKEN BY GUEST AND FOCUS ON THIS GRAPH ON THE GROWTH IN ENERGY DEMAND BY FUEL TYPE. WE SEE THAT MOST OF THE ADDITIONAL DEMAND ENERGY DEMAND IS GOING TO BE SATISFIED BY GAS. BUT ALSO OIL AND OTHER RENEWABLES WILL PLAY QUITE AN IMPORTANT ROLE SATISFYING THE WORLD ENERGY NEEDS. AND TOGETHER OIL AND GAS ARE ESTIMATED TO SATISFY 53% OF THE WORLD ENERGY NEEDS IN THE FUTURE. ANOTHER MEGA THREAT WHEN WE EMPHASIZE IN THE OUTIS LOOK IS THAT THE WORLD IS INCREASINGLY BECOMING MORE ENERGY EFFICIENT. AND LESS ENERGY POOR SO YOU CAN SEE THIS GRAPH WE HAVE ENERGY INTENSITY CLEAR DOWN TREND AND THIS IS ON THE BACK OF POLICY, AND ENERGY EFFICIENCY POLICY, BUT ALSO TECHNOLOGICAL DEVELOPMENT, AND CHANGING COMPOSITION GDP COUNTRY DEVELOPS THEIR SERVICE SECTOR INCREASES. AND ALSO ENERGY AS YOU CAN SEE THERE, THE GAP IN THE ENERGY USE FOR CAPITA OR NARROWS BETWEEN REGIONS. HOWEVER, THE GAP REMAINS QUITE WIDE. THE AVERAGE ENERGY USE PER CAPITA IN DEVELOPING WORLD IS STILL ONLY ONE-THIRD OF WHAT HAD IS IN THE DEVELOPED WORLD BY 2040. NOW, LET ME ZOOM IS IN A LITTLE BIT MORE ON THE OIL MARKETS EVOLUTION UP TO 2040. WE START WITH THE FIRST SIGN OF THE MARKET THE DEMAND SIDE. THAT'S EXCELLENT YOU MENTIONED OIL DEMAND IS SAID TO INCREASE TO REACH 109.4 MILLION BARS PER DAY IN 2040 THAT'S AN INCREASE OF 18.4 MILLION BARS PER DAY DURING THIS PERIOD. THAT'S REGIONALLY VERY IMPORTANT DIFFERENCES AND DEMAND IS EXPECTED TO DROP, DROP OF 9 MILLION BARS PER DAY, THE DEMAND IN DEVELOPING COUNTRIES IS EXPECTED TO INCREASE SIGNIFICANTLY. DISH OUT 25 MILLION BARS PER DAY. ANOTHER IMPORTANT OBSERVATION HERE IS THAT THE GROWTH OF OIL DEMAND IS EXPECTED TO DEACCELERATE IN THE LONG-TERM THAT IS QUITE IMPORTANT DURING THE FIRST FIVE YEARS, THE AVERAGE OIL DEMAND GROWTH IS 1.1 MILLION BARS EVERY YEAR TOWARDS THE END, IT IS ONLY 0.3 MILLION EVERY YEAR. THIS IS ON THE BACK OF LOWER ECONOMIC GROWTH AND TIGHTENING OF ENERGY EFFICIENCY. IN TERMS OF SECTORS, MOST OF THE GROWTH WE CONTINUE TO COME FROM THE WORLD TRANSPORTATION SECTOR ACTUALLY ONE-THIRD OF THE ADDITIONAL DEMAND WILL COME FROM THE ROAD TRANSPORTATION SECTOR. BUT WE ALSO SEE STRONG GROWTH IN THE CHEMICAL AND IN THE AVIATION SECTOR. I ALSO WANTED TO ZOOM IN A LITTLE BIT MORE ON THE CONFLICT AND ROAD TRANSPORTATION, EVERY DAY WE HEAR NEWS AND HIGH EXPECTATIONS ABOUT PENETRATION OF ELECTRIC VEHICLES FOR EXAMPLE, SO THE OUTIS LOOK PROVIDES WHAT ANALYSIS ON HOW THE CAR FLEET WILL EVOLVE INTO THE FUTURE. SO LET ME START BY SAYING THAT THE NUMBER OF PASSENGER CARS WILL MORE THAN DOUBLE WHEN WILL WE LOOK INTO THE FUTURE. CURRENTLY, WE HAVE AROUND 1 PRESIDENT 1 BILLION PASSENGER CARS IN THE WORLD. AND IN THE FUTURE, THAT NUMBER WILL REACH 2.1 BILLION. SO SIGNIFICANT INCREASE IN THE CAR FLEET. BUT REGIONALLY, THERE ARE VERY IMPORTANT DIFFERENCES THE NUMBER OF CARS WILL INCREASE MARGINALLY AS YOU CAN SEE IN THE GRAPH WHILE MOST OF THE GROWTH WILL COME FROM THE DEVELOPING COUNTRIES AT INCOME LEVEL INCREASE IN THOSE -- IN THOSE COUNTRIES. BUT IT IS ALSO IMPORTANT NOT TO WORRY WHERE THESE CARS ARE LOCATED BUT ALSO WHAT HAD TYPE OF CARS WILL BE HITTING THE ROAD IN THE FUTURE. AND IN THE WORLD WE DIFFERENTIATE BETWEEN CONVENTIONAL CARS WHICH ARE PURE GASOLINE DIESEL AND ENERGY CAR VERSUS NONCONVENTIONAL WHICH INCLUDE NATURAL GAS VEHICLE, HYBRID VEHICLE, PLUG-IN AN MODERN HYDROELECTRIC VEHICLE AND FUEL SALE VEHICLES AND IN THE GRAPH PENETRATION OF THE NON CONVENTIONAL EXPECTED TO INCREASE QUITE SIGNIFICANTLY ACCORDING TO THE ACCOUNT FOR 4% OF THE CAR FLEET, AND IN 2040 WE EXPECT TO ACCOUNT FOR 22% OF THE CAR FLEET. SO QUITE AN IMPORTANT INCREASE. AND WE ZOOM IN IN THE NONCONVENTIONAL BATTERY ELECTRIC VEHICLES WILL BE -- TAKING A LEADING ROLE IN THE PENETRATION. WE EXPECT 141 MILLION ELECTRIC VEHICLES IN 2040. NOW, WE MOVE TO THE SUPPLY SIDE OF THE MARKET IN THE NONOPTIC THAT IT WILL RECOVER SLOWLY. GROWTH WILL COME FROM LATIN AMERICAN PARTICULARLY BRA DISILG BUT ALSO U.S. AND CANADA O.C. WITH ADDITIONAL IN THE MEDIUM TERM. THE STORY IS A LITTLE BIT DIFFERENT IN THE LONG-TERM AND A THE SUPPLY EXPECTED TO AFTER THE RECOVERY TO REMAIN FAIRLY FLAT. FOR 2030 AND IS IT THE MAIN SOURCE OF GROWTH INITIALLY UP TO AROUND 2025, 2030, AND THEN OIL AND BIOFUELS ARE STARTING TO PEEK IN AS MAIN SOURCE OF GROWTH. AND WITH THIS IN MIND, WITH THE DEMAND FOR CRUDE IS EXPECTED TO INCREASE TO 41 MILLION BARS PER DAY. THAT ACCOUNTS FOR 37% OF THE WORLD SUPPLY CURRENTLY THE CREW ABOUT THES FOR 33% OF THE WORLD BIGGEST SUPPLY. SO IN A SENSE, THE IMPORTANCE OF THE MARKET IS EXPECTED TO INCREASE IN THE FUTURE.

https://en.m.wikipedia.org/wiki/List_of_countries_by_oil_consumption