India is rapidly emerging as the world’s largest growth market for energy, says BP West Africa head of origination John Goodridge.
He told the annual African Refiners & Distributors (ARA) conference, in Cape Town, that while growth in energy demand in China was tapering off, demand in India would continue to rise rapidly.
Goodridge said global energy demand is being driven by the non-Organisation for Economic Cooperation and Development (OECD) countries, with China and India accounting for a 25% increase in world energy demand and growth in OECD countries remaining flat.
The transition to a lower carbon fuel mix continues, with renewables becoming increasingly important.
Goodridge said he expected renewables to account for 40% of energy growth up until 2040.
“This will bring us to a diversified energy mix in 2040, with a convergence of roughly 25% each coming from coal, gas, oil and renewables. It will be the most diversified energy mix the world has ever seen. Compare this to beginning of the twenty-first century which was dominated by 95% coal.”
Over the 25-year period from 2015 to 2040, global liquids supply growth would be led by low-cost producers, particularly in the US.
Goodridge said he expected global oil refining to come under increasing pressure. While there would be demand growth for liquid fuels, there was an increasing interest in biofuels and other liquids rather than those through a refinery.
He said even if China and India continued to grow, refinery capacity would become over-supplied. “Refineries in OECD countries will feel real pressure.”
Goodridge said Africa would play an increasing role in the global energy outlook, with Nigeria alone expected to have a higher population than the US by 2050.
“The energy use per head in Africa is much lower, but with a growing population and growing urbanisation, the challenge is to make sure that energy is delivered for people to have fruitful, developed lives.”
He said energy demand from Africa was expected to spike particularly towards 2040, when it would account for around 20% of global energy demand.
Meanwhile, Goodridge said ‘revolutionary’ developments in shale gas in the US had changed the energy landscape.
He said even though the oil industry remained at a high level in the US and the country was producing more oil, inventories have been reduced. This was largely due to efficiencies.
“The US is producing more oil for less wells.”
Goodridge said that at the end of 2017, there were 747 oil rigs in the US compared to a peak of 1 609 in October 2014.
The ARA conference, which is themed Moving Forwards has attracted delegates from across Africa and the world. ARA was formed in 2006 to provide a pan-African voice for the African oil supply, refining and distribution industry.