Energy Use Enjoys Strong Growth

Worldwide energy consumption will grow by 60% over the next two decades, according to the reference case projection released today by the Energy Information Administration (EIA) in its annual forecast of international energy demand. The "International Energy Outlook 2002" (IEO2002) expects much of the growth to occur in the developing world, with the regions of developing Asia (including China, India, and South Korea) and Central and South America leading the way as their consuming patterns increasingly resemble those of the industrialized world. The IEO2002 reference case expects world oil prices to moderate in 2002 and prices to reach $25 per barrel in 2000 dollars ($42 per barrel in nominal dollars) by 2020, slightly higher than in last year's "Outlook," reflecting the successes OPEC have had in managing oil production cutbacks to raise oil prices in 2000. Worldwide, oil consumption rose by less than 0.1 mbd day in 2001, divided evenly among the industrialized (mainly Western Europe) and developing (mainly Central and South America) nations. Demand is expected to begin to recover in 2002 as the world economies recover from the slowdown in 2001, and global oil demand is projected to expand by about 0.6 mbd in 2002. In the IEO2002 reference case projection, world oil consumption increases from 75 mbd in 1999 to 119 mbd in 2020, an annualized growth rate of 2.2%. The increases in worldwide oil use projected in the reference case would require an increment of almost 44 mbd over current production capacity by 2020. OPEC producers are expected to be the major beneficiaries of increased production requirements, but non-OPEC supply is expected to remain competitive, with major increments coming from offshore resources, especially in the Caspian Basin, Latin America, and deepwater West Africa. Deepwater exploration and development initiatives are generally expected to be sustained worldwide, with the offshore Atlantic Basin emerging as a major future source of oil production in both Latin America and Africa. Source: Haight Gardner Holland & Knight, Washington, DC