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BP Energy Outlook 2017 edition

Paul Appleby Head of energy economics

© BP p.l.c. 2017 2017 Energy Outlook

Global energy demand

2

Billion toe

Energy consumption by region Growth in GDP and primary energy

0

2

4

6

8

10

12

14

16

18

1965 1975 1985 1995 2005 2015 2025 2035

Other

Africa

Other non-OECD Asia

India

China

OECD

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

1965-1975

1975-1985

1985-1995

1995-2005

2005-2015

2015-2025

2025-2035

Energy intensity

GDP

Primary energy

% per annum

© BP p.l.c. 2017 2017 Energy Outlook

Fuel mix

3

Primary energy consumption by fuel Shares of primary energy

*Renewables includes wind, solar, geothermal, biomass, and biofuels

0

2

4

6

8

10

12

14

16

18

1965 1975 1985 1995 2005 2015 2025 2035

Renewables*

Hydro

Nuclear

Coal

Gas

Oil

Billion toe

0%

10%

20%

30%

40%

50%

1965 1975 1985 1995 2005 2015 2025 2035

Oil

Coal

Gas

Hydro

Nuclear

Renewables*

© BP p.l.c. 2017 2017 Energy Outlook

0%

10%

20%

30%

40%

EU China US OECDAsia

India Africa

1995-2015

2015-2035

0%

10%

20%

30%

40%

1995 2005 2015 2025 2035

EU

US

World

China

Renewables

4

Renewables as a share of power generation

Shares of renewable power growth

© BP p.l.c. 2017 2017 Energy Outlook 5

• How might electric cars and the broader mobility revolution affect oil demand?

• How might the abundance of oil resources affect the behaviour of low-cost oil producers?

Oil

© BP p.l.c. 2017 2017 Energy Outlook

Oil demand

6

Liquids demand growth

-0.5

0.0

0.5

1.0

1.5

2.0

2005-2010

2010-2015

2015-2020

2020-2025

2025-2030

2030-2035

Power Buildings

Industry Non-combusted

Transport Total

Mb/d, average annual growth

0

20

40

60

80

100

120

2000 2005 2010 2015 2020 2025 2030 2035

Mb/d

Liquids demand

Non-combusted

Industry

Buildings

Ships, trains & planes

Trucks

Cars

Power

Transport

Liquids includes oil, biofuels and derivatives of coal and natural gas

© BP p.l.c. 2017 2017 Energy Outlook

Growth of electric cars

7

0.0

0.5

1.0

1.5

2.0

By region By type By region By type

2015 2035

Electric cars

Conventional cars

Non-OECD

OECD

Billions of vehicles $/kWh

The global car fleet: 2015-2035 Illustrative path for battery pack costs

*For a Battery Electric Vehicle with a 60 kWh pack. Cost projections depend heavily on the degree of EV uptake, which is uncertain, so ranges should be treated as illustrative only. Current estimates of battery costs also vary widely, but this uncertainty is not shown

0

50

100

150

200

250

2015 2020 2025 2030 2035

Range of estimates of cost parity between

electric and oil-powered

cars

Battery pack costs*

© BP p.l.c. 2017 2017 Energy Outlook

19

23 17

0.2 1.2

23

0

5

10

15

20

25

30

35

40

45

2015 Growth indemand for travel

Gains in fuelefficiency

Switching tonatural gas

vehicles

Switching toelectric vehicles

2035

Liquid fuel demand from cars

8

Decomposing changes in liquids demand from cars: 2015-2035

Mb/d

© BP p.l.c. 2017 2017 Energy Outlook 9

Mobility revolution

• Electric cars: lead to a switch away from conventional cars

• Autonomous vehicles: improve fuel efficiency via efficient driving

• Car sharing: can amplify the effects of new-technology cars

• Ride pooling: reduce total miles driven by pooling journeys

© BP p.l.c. 2017 2017 Energy Outlook

Mb/d

Digital revolution: Impact on oil demand in cars in 2035

15

20

25

Electric revolution: Impact on oil demand in cars in 2035

10

Mobility revolution scenarios

Mb/d

15

20

25

© BP p.l.c. 2017 2017 Energy Outlook 11

• How might electric cars and the broader mobility revolution affect oil demand?

• How might the abundance of oil resources affect the behaviour of low-cost oil producers?

Oil

© BP p.l.c. 2017 2017 Energy Outlook 12

Abundance of oil resources

Estimates of technically recoverable resources and cumulative oil demand

40%

45%

50%

55%

60%

65%

0

10

20

30

40

50

60

70

1985 1995 2005 2015 2025 2035

US

Russia

Mb/d

Oil supply of lower-cost producers

Share

Low-cost producer’s share of global liquids production (right axis)

Middle East OPEC

0.0

0.4

0.8

1.2

1.6

2.0

2.4

2.8

Technicallyrecoverable resources

Middle East

CIS

N America

S&C America

Asia Africa

Europe

2015- 2035

2015- 2050

Trillion barrels

Cumulative demand

© BP p.l.c. 2017 2017 Energy Outlook 13

Bcf/d

Gas supply growth: 2015-2035

Bcf/d

Gas consumption by sector

0

20

40

60

80

100

120

140

Shale Conventionaldecline

Conventionalgrowth

Middle East

US

Other

China

Africa

Russia

Australia

Other

0

100

200

300

400

500

1965 1975 1985 1995 2005 2015 2025 2035

Transport

Buildings

Power

Non-combusted

Industry

Natural gas

© BP p.l.c. 2017 2017 Energy Outlook

Growth of LNG

14

Bcf/d

LNG supply

0

10

20

30

40

50

60

70

80

1990 2005 2020 2035

Other

Russia

Africa

United States

Australia

Qatar

LNG demand

0

10

20

30

40

50

60

70

80

1990 2005 2020 2035

Other

Middle East

S&C America

Asia

Europe

Bcf/d

© BP p.l.c. 2017 2017 Energy Outlook

LNG Trade

Net LNG exports and imports in 2035 (Bcf/d)

17

Exports

Imports

15

22

North America

17

Europe 5

Russia

44

Other Asia

9

Middle East

17

Australia 7

Africa S & C America

2

© BP p.l.c. 2017 2017 Energy Outlook 16

Carbon emissions

© BP p.l.c. 2017 2017 Energy Outlook

0

10

20

30

40

1965 1975 1985 1995 2005 2015 2025 2035

IEA 450

Base case

Carbon emissions

17

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

% per annum

Contributions to slower growth of carbon emissions

GDP

Energy intensity

Fuel mix

1995-2015 2015-2035

Billion tonnes CO2

Carbon emissions

© BP p.l.c. 2017 2017 Energy Outlook

20

30

40

1995 2005 2015 2025 2035

Base case

Faster transition

Even faster transition

Faster transition pathways

18

0 2 4 6 8 10

Transport

Industry &Buildings

CCUS*

Power

Faster transition

Even faster transition

*Carbon capture, use and storage (predominantly in power sector)

Billion tonnes CO2 Billion tonnes CO2 in 2035

Carbon emissions Reductions in emissions versus base case

© BP p.l.c. 2017 2017 Energy Outlook

Energy outlook under alternative transition pathways

CO2 -150

-100

-50

0

50

100

150

200

250

1995-2015

Base FT EFT

Non-fossil

Coal

Gas

Oil

Total

Mtoe per annum

2015-35

Annual demand growth by fuel

19

0%

10%

20%

30%

40%

50%

2015 Base FT EFT

Oil Coal

Gas Non-fossil

% of primary energy

The changing fuel mix

2035

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BP Energy Outlook 2017 edition