RIYADH: Global energy consumption growth remained robust in 2007, driven by above-average economic growth and despite continued high prices, observed Mark Finley, general manager Global Energy Markets and US Economics at a round table discussion held at the International Energy Forum (IEF) yesterday.
Presenting the “Statistical Review of world Energy Markets and US Economics” at a distinguished gathering, Finley said: “OECD countries are showing the most significant reaction to continued high energy prices.” The speaker was introduced to the audience by Dr. Said Nachet, director of the Energy Division of the IEF.
“Divergent price movements, between fuels and regions, affected energy market developments in 2007. Crude oil prices rose for a sixth consecutive year — the longest unbroken period of growth in our data set. Natural gas prices increased modestly except in Europe, where spot prices fell substantially. For a second consecutive year, steam coal prices fell in North America but increased elsewhere.”
He pointed out that world primary energy consumption increased by 2.4 percent in 2007 — down from 2.7 percent in 2006, but still the fifth consecutive year of above average growth. “The Asia-Pacific region accounted for two-thirds of global energy consumption growth, rising by an above average 5 percent even though consumption in Japan declined by 0.9 percent.
North American consumption rebounded after a weak year in 2006, rising by 1.6 percent — double the 10-year average. Chinese growth of 7.7 percent was the weakest since 2002, although still above the 10-year average (as was China’s economic growth).”
China again accounted for half of global energy consumption growth. Indian consumption grew by 6.8 percent, the third-largest increase after China and the US. EU energy consumption declined by 2.2 percent, with Germany registering the world’s largest decline in energy consumption.
According to the review, Brent crude oil averaged $72.39 per barrel in 2007, an increase of 11 percent. Prices rose steadily throughout the year, from a low of just over $50 in mid-January to above $96 by year-end. Temporary bottlenecks caused the US benchmark West Texas Intermediate (WTI) to trade at a discount to Brent for the first time since 1979.Discounts for heavy, sour crude remained high reflecting continued refining constraints. Global oil consumption grew by 1.1 percent in 2007, or 1 million barrels per day (bpd), slightly below the 10-year average. Consumption in the oil-exporting regions of the Middle East, South and Central America and Africa accounted for two-thirds of the world’s growth. The Asia-Pacific region grew by 2.3 percent, roughly in line with the historical average even though growth in China and Japan was below average, with strong growth in a number of emerging economies. OECD consumption fell by 0.9 percent, or nearly 400,000 bpd. The global growth rate for light distillates matched that of middle distillates for the first time since 2002 due to strong petrochemicals demand. Global oil production fell by 0.2 percent, or 130,000 bpd, the first decline since 2002. OPEC production dropped by 350,000 bpd due to the cumulative impact of production cuts implemented in November 2006 and February 2007. Among the 10 members participating in production cuts, crude oil output fell by 900,000 bpd. Saudi Arabia’s output dropped by 440,000 bpd, the largest decline in the world last year. Increased output in Angola and Iraq, and growing supply of condensates/natural gas liquids (NGLs), partially offset that decline.
Oil production growth outside OPEC remained weak, rising by 230,000 bpd in 2007. OECD output declines moderated, but nonetheless fell for a fifth consecutive year. Production in both Norway and Mexico declined by more than 200,000 bpd. Former Soviet Union output rose by nearly 500,000 bpd, with Azerbaijan and Russia each growing by more than 200,000 bpd. International trade in crude oil and refined products rose despite OPEC production cuts and rising domestic consumption in oil-exporting countries. Much of this growth was in refined products, a reflection of imbalances and constraints in the world’s refining system.