Southeast Asian oil demand to rise to 2050: IEA

Spanish Market: Crude oil, Electricity, Natural gas
22/10/24

Southeast Asia's oil demand is set to increase to 7mn b/d in 2050 under current policies, according to the IEA's latest Southeast Asia Energy Outlook released today.

Oil demand in the southeast Asian region is set to rise from 5mn b/d in 2023 to 6.4mn b/d in 2035, and to 7mn b/d in 2050. This is a downward revision from the IEA's previous outlook in 2022, which projected oil demand rising to about 7mn b/d in 2030 and 7.5mn b/d in 2050.

The IEA's stated policies scenario (Steps) is based on countries' existing policies, while the announced pledges scenario (APS) assumes that governments meet all their national energy and climate targets, including long-term net zero goals. Under the APS, oil demand continues to grow but to a lesser extent to 5.2mn b/d in 2035, and then falls to 3.8mn b/d in 2050.

The transport sector is the main driver of the region's increase in oil demand, with oil consumption in that sector more than doubling from 1.3mn b/d in 2000 to 2.8mn b/d currently. Under current policies and trends, gasoline and diesel consumption for road transport rises by around 30pc by 2050, reaching nearly 1.6mn b/d.

The region's gas demand is projected to rise from around 170bn m³ currently, to around 210bn m³ in 2030 and about 270bn m³ in 2050. This compared to the IEA's 2022 projections of 240bn m³ in 2030 and about 340bn m³ in 2050.

Gas demand has increased by 5pc since 2022, according to the IEA. This recovery comes after a 4pc fall in demand over 2019-22, resulting from Covid-19 and a rise in LNG prices following Russia's invasion of Ukraine.

Overall energy demand is expected to rise by "about a third by 2035 and two-thirds by 2050," according to the IEA, with just under half of this demand growth to be met by fossil fuels. Under the APS, energy demand grows to a smaller extent of around 40pc to 2050, reflecting accelerated improvements in efficiency, electrification and fuel switching.

The share of fossil fuels in the total energy mix falls from 78pc currently to 65pc in 2050. This is lower than the 2022 outlook's projection that fossil fuels would make up more than 70pc of the energy mix in 2050.

The downward revisions in fossil fuel demand and their share in the energy mix is likely because renewables are set to grow rapidly in the region. Renewable energy already accounts for just under 20pc of the region's energy mix, through hydropower, geothermal and bioenergy. Clean energy is set to meet more than 35pc of energy demand growth to 2035 under the Steps scenario, because of rapid expansions in wind and solar power.

IEA's growing presence in southeast Asia

The IEA and Singapore inaugurated the IEA Regional Co-operation Centre on 21 October — the first office outside of the organisation's Paris headquarters. The centre will serve as a hub for IEA's activities and engagement in the region, so the organisation can provide policy guidance, technical assistance, training and capacity-building to address areas such as scaling up the deployment of renewables and increasing access to finance for clean energy investments.

Southeast Asia is projected to be second only to India in the contribution to global energy demand growth over the coming years, said IEA's chief energy economist Tim Gould on 22 October at the Singapore International Energy Week. This is why the new regional center is so important, he added.

Cross-border electricity trade, in particular, is going to be a high priority, Gould said. "A key work, from an IEA perspective, is to make those opportunities to bring in the private sector and different sources of finance for these projects," he added.

By Prethika Nair

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12/12/24

Opec+ decision reduces potential supply surplus: IEA

London, 12 December (Argus) — The recent decision by Opec+ members to delay a planned output increase has "materially reduced" a potential supply surplus next year, the IEA said today. Opec+ producers earlier this month pushed back a plan to start unwinding 2.2mn b/d of voluntary crude production cuts by three months to April 2025 and to return the full amount over 18 months rather than a year. Still, the oil market in 2025 is still likely to be significantly oversupplied, the IEA said in its Oil Market Report (OMR), given persistent overproduction by some Opec+ members, strong supply growth from outside the alliance and modest global oil demand growth. The Paris-based agency's base case forecasts show supply exceeding demand by 950,000 b/d next year, even if all Opec+ cuts remain in place. The supply surplus would increase to 1.4mn b/d if alliance members start increasing output from April as planned, the IEA said. This is far from guaranteed. Opec+ has already delayed its plan to increase output three times and continues to say a decision to unwind will depend on market conditions. While the IEA expects oil demand growth to remain subdued next year, its latest forecasts show a slightly higher outlook than in its previous report . The agency revised up its oil demand growth forecast for 2025 by 90,000 b/d to 1.1mn b/d, largely because of China's recently announced economic stimulus measures. This would see global consumption rise to 103.9mn b/d. But the IEA downgraded its oil demand growth forecast for this year by 80,000 b/d, to 840,000 b/d, mostly because of "weaker-than-expected non-OECD deliveries in countries such as China, Saudi Arabia and Indonesia." It said non-OECD oil demand growth in the third quarter, at 320,000 b/d, was the lowest since the height of the Covid-19 pandemic. The IEA said lacklustre demand growth this year and next reflects "a generally sub-par macroeconomic environment and changing patterns of oil use." Increases will be driven by petrochemical feedstocks, and demand for transport fuels "will continue to be constrained by behavioural and technological progress." On supply, the IEA downgraded its growth estimates for 2025 by 110,000 b/d to 1.9mn b/d. Most of this will come from non-Opec+ countries such as the US, Canada, Guyana, Brazil and Argentina. The agency nudged lower its supply forecasts for this year, by 10,000 b/d to 630,000 b/d. The IEA said global observed oil stocks declined by 39.3mn bl in October, led by an "exceptionally sharp" fall in oil product inventories due to low refinery activity coupled with higher demand. It said preliminary data show a rebound in global inventories in November. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

EPA defends 'good neighbor' efficacy

11/12/24

EPA defends 'good neighbor' efficacy

Houston, 11 December (Argus) — The US Environmental Protection Agency (EPA) responded to concerns raised by the US Supreme Court in June by defending the efficacy of the "good neighbor" plan in reducing NOx emissions regardless of the number of participating states. The high court's concerns were over the issue of severability — that is, how effective the good neighbor plan would be in lowering ozone season NOx emissions if only some of the original 23 states participated. In other words, it is the question of whether the emissions limits placed on states as part of the Cross-State Air Pollution Rule (CSAPR) cap-and-trade program under the plan would have changed based on the number of participating states. In a notice published in the Federal Register on Tuesday, EPA rejected the idea that the effectiveness of the good neighbor plan — and as a result, the NOx emissions limits imposed on each state — would wane if the number of participating states changed. Instead, the agency said that its plan is "by design severable by state" because the NOx emissions limits are imposed on individual sources rather than the states themselves. Each participating state's emissions obligations depend on the number of obligated power plants, their emissions and the types of emissions reduction measures they already have in place. As a result, pausing the imposition of tighter NOx limits under the good neighbor plan in certain states does not affect the NOx limits imposed in other participating states, EPA said. In a similar vein, EPA addressed concerns that the larger version of the CSAPR Group 3 seasonal NOx allowance trading program established under the good neighbor plan would become more illiquid if it covered fewer states than planned, which could lead to a smaller supply of allowances and higher prices. Calling those concerns "unjustified", the agency said that states can withdraw their sources from a trading program by submitting their own ozone reduction plans. EPA also cited previous instances from past cross-state ozone programs where the number of participating states has changed, noting that there has been no evidence of allowance shortages. EPA also responded to concerns that it used an inconsistent methodology to determine emissions obligations for each source — including the emissions reduction strategies that could be used and their associated costs. The agency said it used a methodology that was "nearly identical to prior good neighbor rules" and considered NOx reduction technologies that have been in place "for decades throughout the US." The severability issue was raised by the Supreme Court in June, when it paused implementation of the good neighbor plan nationwide. The court majority said that EPA did not provide a sufficient explanation in response to public comments from states that highlighted those concerns — especially because, until the court issued its stay, only 10 states were participating in the good neighbor plan because of lower court stays. But in September, the US Court of Appeals for the DC Circuit allowed EPA to respond to the issue of severability, while it paused related litigation. EPA finalized the "good neighbor" plan last year to help downwind states meet the 2015 federal ozone standards. It imposed more rigorous CSAPR ozone season NOx emissions limits on more than 20 states and called for new NOx limits for industrial sources. Illiquidity has been persistent in the CSAPR market, depressing activity and keeping prices steady for almost a year because of uncertainty surrounding the numerous legal challenges against the plan. The ozone season runs from May-September each year. With plan halted for the time being, EPA has returned to less-stringent seasonal NOx budgets and reshuffled the remaining participating states into the Group 2 and new "expanded" Group 2 markets, leaving the Group 3 market empty. By Ida Balakrishna Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop 29 grids, storage pledge signatories released

11/12/24

Cop 29 grids, storage pledge signatories released

London, 11 December (Argus) — The final list of signatories for pledges on expanding energy storage and grid capacity taken at the UN Cop 29 climate summit, was released today, almost four weeks after the commitment was first finalised, with 58 countries out of almost 200 Cop parties taking part. Signatories commit to a collective goal of increasing electricity storage capacity to 1500GW by 2030, a sixfold increase from 2022. Another pledge is to add or refurbish 25mn km of grid infrastructure by 2030, and recognise the need for an additional 65mn km by 2040. Lack of firm, clean power generators to back up intermittent renewables is a major barrier to increasing renewable penetration, while distributed resources require large investments in power grids to transport electricity to consumers. The list of 58 signatory countries includes the so-called troika of Cop host countries the UAE, Azerbaijan and Brazil. The US and all other G7 member states are present, with the exception of France. Also absent among major economies are China and Russia, while Saudi Arabia spoke in support of the pledges during Cop but does not appear on the list of signatories. In comparison, almost 120 countries had signed a pledge to triple global renewable capacity double global energy efficiency by 2030 during the Cop 28 summit in Dubai last year. The grids and storage pledges were one of the centrepiece announcements made by the Azeri host, following on from the calls made in Dubai on renewable capacity and energy efficiency, but also on transitioning away from fossil fuels in energy systems. But divergences on mitigation — actions to cut greenhouse gas emissions — during the summit this year, meant that the completed pledge, as well as any other specific mentions of fuels and energy transition technologies, were not included in final outcome texts. By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US inflation rises to 2.7pc in November

11/12/24

US inflation rises to 2.7pc in November

Houston, 11 December (Argus) — Headline US inflation ticked higher in November, largely on food and shelter costs, suggesting the Federal Reserve still has work to do to reach its inflation target. The consumer price index rose by an annual 2.7pc in November after rising by 2.6pc through October, the Labor Department said. The gain matched expectations in a survey of economists by Trading Economics. So-called core inflation, which strips out more volatile food and energy, rose by 3.3pc, matching the prior month's gains. Services less energy services rose by 4.6pc following a 4.8pc increase the prior period. Today's report is the last consumer price index (CPI) reading before Federal Reserve policymakers meet next week to assess progress in bringing down inflation to their 2pc long term goal and release economic projections. The CME FedWatch tool today gave a 96pc probability the Federal Reserve will cut its target rate by a quarter point at its last meeting of the year, up from nearly 89pc Tuesday. The Fed began cutting its target rate in September after holding it at a 23-year high for more than a year. The energy index contracted by 3.2pc for the 12 months ending in November after falling by 4.9pc through October. Gasoline fell by 8.1pc and the fuel oil index declined by 19.5pc. The food index rose by 2.4pc over the past year, following a 2.1pc gain through the prior month. Transportation services rose by 7.1pc. Shelter slowed to 4.7pc from 4.9pc The CPI rose by 0.3 in November from the prior month, after rising by 0.2pc in each of the prior four months. The shelter index rose by 0.3pc for the month, accounting for nearly 40pc of the total monthly gain in the headline index, Labor said. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Opec trims oil demand growth forecasts again

11/12/24

Opec trims oil demand growth forecasts again

London, 11 December (Argus) — Opec has revised down its global oil demand growth forecasts for 2024 and 2025 for a fifth time in a row. In its final Monthly Oil Market Report (MOMR) of the year, the producer group has cut its 2025 oil demand growth forecast by 90,000 b/d to 1.45mn b/d. This is entirely driven by a downgrade in its demand projection for the Middle East. From the start of this year right up until July, Opec had been forecasting global demand growth of 1.85mn b/d for next year. The group has also lowered its demand growth forecast for this year — by 210,000 b/d to 1.61mn b/d, mostly driven by reduced growth projections in the Middle East, India and the Americas. Up until July, Opec had been predicting that demand would increase by 2.25mn b/d this year. Opec's downward demand growth revisions slightly close the gap with other forecasters such as the IEA and EIA, which project much lower levels of consumption growth. The IEA sees oil demand growing by 920,000 b/d this year and by 990,000 b/d next year, while the EIA projects 890,000 b/d and 1.29mn b/d, respectively. On supply, Opec has kept its non-Opec+ liquids supply growth forecast for next year unchanged at 1.11mn b/d. But it has upgraded its estimate for this year by 50,000 b/d to 1.28mn b/d, underpinned by stronger-than-expected US production. Opec+ crude production — including Mexico — increased by 323,000 b/d to 40.665mn b/d in November, according to an average of secondary sources that includes Argus . The call on Opec+ crude remains 42.4mn b/d for this year and 42.7mn b/d for next year, according to the MOMR. Opec+ producers agreed earlier this month to delay a plan to start unwinding 2.2mn b/d of voluntary cuts by three months to April 2025 and to return the full amount over 18 months rather than a year. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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