Alternative scenarios stress major demand uncertainties for OPEC crude

The Reference Case outlook is not a forecast of how the future will evolve, but an internally consistent and feasible benchmark derived from a set of Reference Case assumptions and current policies. It is selfevident that different patterns of oil and energy demandand supply could emerge, with plausible alternative sets of assumptions. Accordingly, scenarios have been developed for future OPEC crude oil demand. The first scenario, Lower Economic Growth (LEG), looks at the impact of lower economic growth, both in the medium-term, largely as a result of the on-going Euro-zone debt crisis and the Chinese growth slowdown, but also in the longer term. A second scenario, Higher Economic Growth (HEG), acknowledges that there is indeed upside potential for economic growth and explores what this could imply for OPEC oil. And the third scenario, Liquids Supply Surge (LSS), estimates the possible impact upon OPEC crude if the overall supply of liquids other than OPEC crude is higher than estimated in the Reference Case. The change in expectations relative to the Reference Case is startling in all three cases. On the one hand, they demonstrate genuine concern over security of demand; on the other, they underscore that circumstances could arise where considerably more OPEC crude oil will be needed than the Reference Case suggests. The two downside risk cases involve either a stagnant call on OPEC crude, or a falling one, while the HEG scenario sees substantially higher production levels. By 2035, the expectations for OPEC crude are very similar across the downside risk scenarios, at 25 26 mb/d, while the HEG scenario sees the need for OPEC crude at over 43 mb/d.

ENERGY DEMAND Over the period 20102035, primary energy demand6 in the Reference Case increases by 54% (see Table 1.4). Fossil fuels, currently accounting for 87% of energy demand, will still make up 82% of the global total by 2035. For most of the projection period, oil will remain the energy type with the largest share. However, towards the end of the projection period, in the Reference Case, coal use reaches similar levels to that of oil, with the oil share having fallen from 35% in 2010 to 27% by 2035. Natural gas use will rise at faster rates, both in percentage terms and quantities, than either coal or oil, with its share rising from 23% to 26%. Figure 1.13 There is clearly potential for shale gas on the world energy scene. Figure 1.9 shows the volume of natural gas reserves, excluding shale gas, but adding estimates for shale ga3s0r0eserves to these figures would further emphasize the potential of natural gas. Long-term oil demand prospects have not only been affected by the medium-term downward revisions, but by higher oil prices too. Additionally, the implications of tech- nological developments and deployment, especially in the transportation sector, also contribute to some downward long-term revision. In the Ref- erence Case, demand increases by over 20 mb/d for the period 2010 2035, reaching 107.3 mb/d by 2035. The long-term sees a steady decline in demand in all OECD regions. Fully 87% of the global demand increase is in developing Asia, where demand reaches 90% of that of the OECD by 2035. Global demand in 2035 is more than 2 mb/d lower than in the WOO 2011.