Tony Hayward |
BP Statistical Review of World Energy
2008: "The defining feature of global
energy markets remains high and volatile prices, reflecting a tight
balance of supply and demand. This has put issues such as energy
security and alternative energies at the forefront of the political
agenda worldwide," said Tony
Hayward, BP's Chief Executive at the launch of the annual
The Review shows that
the world's fossil fuel resource base remains sufficient to support
growing levels of production but the continued weakness in oil
supply and increasing demand outside the OECD also highlight the
challenges that industry faces in maintaining secure energy
production in the OECD highlights the fact that, while resources are
not a constraint globally, the resources within reach of private
investment by companies like BP are limited. Political factors,
barriers to entry, and high taxes all play a role here. In other
words, when it comes to producing more oil, the problems are above
ground, not below it. They are not geological, but political,"
"But despite high and
volatile energy prices, the world's energy markets continue to
deliver reliable energy supplies," said Hayward.
According to the Review,
world economic growth was strong last year, despite financial market
turmoil which began in August, and this continued to support global
energy consumption. And although growth in primary energy
consumption slowed in 2007 compared to 2006, at 2.4% it was still
above the 10-year average for the fifth consecutive year.
The oil price has been on an upward path for more than
six years, which according to BP's data series going back to 1861,
is the longest period of rising prices on record.
Statistical Review shows very clearly that markets do work, and that
consumers and producers respond to changes in energy prices when
given the opportunity to do so. However, in many places, policies
interfere with market mechanisms and access to economically rational
upstream reserves is difficult. Further, in a number of countries
consumers are shielded from price increases via subsidies,"
commented Christof Rühl, BP's
Chief Economist at the Review's launch.
Oil: Dated Brent
crude oil averaged $72.39 per barrel in 2007, an increase of 11%.
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 USA benchmark WTI to trade at a discount to Brent for the
first time since 1979. Discounts for heavy, sour crudes remained
high reflecting constraints on upgrading capacity in refining.
Global oil consumption
grew by 1.1% 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%, 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%, or nearly 400,000 bpd.
Global oil production
fell by 0.2%, 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.
Increased output in Angola and Iraq, and growing supply of
condensates/NGLs, partially offset larger cuts in other OPEC
Thunder Horse Platform in the Gulf of Mexico - - BP may begin
production at the Thunder Horse field in the Gulf of Mexico on
June 14th, Reuters said, citing Caryl Fagot, a spokeswoman at
the US Minerals Management Service. The field, 150 miles
southwest of New Orleans, may produce a maximum of 250,000
barrels a day of oil and 200 million cubic feet a day of
natural gas when it reaches peak production, Reuters said on
its web site|
Oil production growth
outside OPEC remained weak, rising by just over 200,000 bpd in 2007;
OECD output fell for a fifth consecutive year. FSU output rose by
nearly 500,000 bpd, with Azerbaijan and Russia each growing by more
than 200,000 bpd.
Proved oil reserves were
essentially flat in 2007-at 1.24 trillion barrels-and are sufficient
to meet current production for more than 41 years. However, the 2006
world total was revised up by 31 billion barrels upon receipt of
more complete information.
Gas: World natural
gas consumption grew by an above-average 3.1% in 2007, although only
North America, Asia-Pacific, and Africa recorded above average
regional growth. The USA accounted for nearly half of the world's
gas consumption growth, driven by cold winter weather and strong
demand for gas in power generation. Chinese consumption grew by
19.9% and accounted for the second-largest increment to global gas
consumption. EU consumption declined by 1.6%-the second consecutive
decline-in face of warm winter weather.
Gas production rose by
2.4% in 2007. The USA accounted for the largest increment to supply,
growing by 4.3%, the strongest growth since 1984. EU production
declined by 6.4%, with UK output falling by 9.5%, the world's
largest volumetric decline for a second consecutive year. A small
decline in Russian production was more than offset by strong growth
elsewhere in the FSU. China and Qatar recorded the second- and
third-largest increments to production, increasing by 18.4% and
LNG shipments rose by
7.3%, supported by continued growth in shipments from Qatar and
Nigeria. USA LNG receipts rose by one-third as a large price premium
to European spot markets resulted in the persion of cargoes to the
Trans Alaska pipeline |
Coal: Coal was the
fastest growing fuel in the world for the fourth consecutive year.
Global consumption rose by 4.5%. Consumption growth was widespread,
with growth in every region except the Middle East exceeding the
10-year average. Chinese coal consumption rose by 7.9%, the weakest
growth since 2002, but more than two-thirds of global growth. Indian
consumption rose by 6.6%, and OECD consumption rose by 1.3%, both
above average figures.
hydroelectric: Nuclear power output fell by 2%, the
steepest decline on record. However, more than 90% of this decline
was accounted for by Germany and Japan-which saw the world's largest
nuclear power plant closed following an earthquake. Hydroelectric
generation increased by 1.7%, slightly below the 10-year average.
Increased capacity in China and Brazil was partially offset by
drought-related declines in the USA and Southern Europe.
energy remains a small share of total global energy use, but most
renewable sources experienced rapid growth in 2007. Ethanol output
rose by 27.8%. Global capacity for wind and solar electricity
generation grew broadly in line with historical averages of 28.5%
and 37%, respectively.
Current Myths about Oil|
in the Financial Times today, Tony Hayward says that the
that high prices are caused by technical factors, such as
speculation. While these factors may have an impact on the
margins, the data clearly show that high prices are really
caused by economic fundamentals.
energy demand growth in 2007 was above average for the fifth
year in a row, driven by the fastest period of economic growth
since the early 1970s. Demand growth is concentrated in those
emerging nations that also subsidise fuel prices, such as
China, India and – increasingly – the oil-producing nations
energy supply has struggled to respond. Production by the
Organisation of the Petroleum Exporting Countries fell by
350,000 barrels of oil a day last year. The production
situation is even more challenging in the market-oriented
nations of the Organisation for Economic Co-operation and
Development, where many existing basins are maturing fast. In
Britain, for instance, North Sea gas production recorded the
world’s lar-gest decline for the second year in a row, falling
by 10 per cent in 2007. UK oil output rose very slightly, but
this is a one-off, based on a single big new field. Production
remains on a downward trend.
says that the last time oil prices surged to this kind of
level, 30 years ago, new production from the North Sea helped
bring prices down. This time, new OECD production will have to
come from frontier provinces such as the Canadian oil sands,
the Arctic and the deep waters of the Gulf of
big impact on supply is Russia, where production has begun to
decline. It is a little-known fact that, until now, the
growing demand for oil from China and India in recent years
has been met almost barrel for barrel by rising supply from
says that myth
number two is
that the world is running out of hydrocarbons. Not so. The
world has ample resources, with more than 40 years of proven
oil reserves, 60 years of natural gas and 130 years of coal.
The problems in bringing on new production are not so much
below ground as above it, and not geological but
number three is
that we can switch quickly to a low-carbon economy. While
biofuels, wind and solar energy are growing rapidly, they
comprise a tiny share – less than 2 per cent – of global
energy production. Humankind remains dependent on fossil fuels
and coal is the fastest-growing of all the main fuel types.
Carbon emissions continue to rise. We clearly all need to work
harder if we are to tackle the threat of climate
writes that where investment is allowed to take place, energy
production responds positively. Last year, US oil and natural
gas production increased – in the case of oil, for the first