26 March 2002

Energy Department Projects Strong Growth in World Energy Use

Asia, South America to boost demand most, report says

The world will experience a dramatic increase in energy consumption in the next two decades fueled mostly by demand in emerging markets, according to a report released March 26 by a U.S. government agency.

The International Energy Outlook 2002, an annual projection of international energy demand, says that global energy consumption will grow 60 percent between 1999 and 2020, the period covered by the forecast.

The Energy Information Administration (EIA), which publishes the report, said in a news release that most of the growth will occur in the dynamic developing countries in Asia and Central and South America.

EIA says that oil is expected to remain the world's dominant source of energy.

But with the conventional oil worldwide reserves three times larger than the cumulative oil demand, the report expects oil prices to stabilize with prices reaching $25 per barrel in 2000 dollars by the end of the projection period as compared to $27.72 per barrel in 2000 and an estimated $22.05 per barrel in 2001.

The EIA release says members of the Organization of Petroleum Exporting Countries (OPEC) are likely to be major beneficiaries of the growing demand for oil. But it adds that non-OPEC countries are expected to remain competitive by boosting production from offshore resources, especially in the Caspian Basin, Latin America and deepwater West Africa.

The release also highlights some of the trends described in the report, including:

• Natural gas remaining the fastest growing component of world energy consumption with its share of total energy consumption rising by 5 percent;

• Nuclear generating capacity stabilizing with a slower than predicted earlier decline in the industrialized world and a boost coming from developing countries, especially Asia;

• Economic growth becoming cleaner with carbon dioxide emission relative to gross domestic product decreasing (although total carbon dioxide emissions are projected to increase by 62 percent with developing countries responsible for most of the increase.)

Following is EIA's new release:

Energy Information Administration
EIA Reports
U.S. Department of Energy
Washington DC 20585

March 26, 2002

Projections Point to Strong Growth in World Energy Use

Worldwide energy consumption grows by 60 percent 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.

Energy markets were influenced by a host of developments in 2001. High world oil prices persisted from 2000 into the first half of 2001 and then weakened substantially in the third quarter of the year. The markets also were affected by the global economic slowdown, led by a mild economic turndown in the United States and the aftermath of the terrorist attacks on the United States on September 11, 2001.

The IEO2002 reference case expects world oil prices to moderate in 2002 and return to the price trajectory anticipated in last year's Outlook for the mid-term, with prices reaching $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 had in managing oil production cutbacks to raise oil prices in 2000.

Worldwide, oil consumption rose by less than 100,000 barrels per 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 600,000 barrels per day in 2002. In the IEO2002 reference case projection, world oil consumption increases from 75 million barrels per day in 1999 to 119 million barrels per day in 2020, an annualized growth rate of 2.2 percent.

The increases in worldwide oil use projected in the reference case would require an increment of almost 44 million barrels per day over current productive 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.

Other report highlights include:

• Natural gas remains the fastest growing component of primary world energy consumption. Over the IEO2002 forecast period, gas use is projected to nearly double in the reference case, reaching 162 trillion cubic feet in 2020. The natural gas share of total energy consumption is projected to increase from 23 percent in 1999 to 28 percent in 2020, and natural gas is expected to account for the largest increment in electricity generation (accounting for 43 percent of the total additional energy used for electricity generation). Much of the projected growth in natural gas consumption is in response to rising demand for natural gas to fuel efficient new gas turbine power plants.

• Carbon intensity -- the amount of carbon dioxide emitted per dollar of gross domestic product (GDP) -- is projected to improve throughout the world over the next two decades, although total carbon dioxide emissions are projected to increase by 62 percent between 1999 and 2020. The most rapid improvements in carbon intensity are, for the most part, projected for the transitional economies of Eastern Europe and the former Soviet Union (EE/FSU). In the FSU, economic recovery from the upheavals resulting from the dissolution of the Soviet Union is expected to continue throughout the forecast. The FSU nations are also expected to replace old and inefficient capital stock and increasingly use less carbon-intensive natural gas for electricity generation and other end uses in place of more carbon-intensive oil and coal. China and India are also expected to see fairly rapid improvements in carbon intensity over the projection period, primarily as a result of large increases in economic growth. Both China and India are expected to continue their heavy dependence on fossil fuels, especially coal, but their combined annual GDP growth is projected to average 6.6 percent, compared with an expected 4.4 percent annual increase in fossil fuel use from 1999 to 2020.

• Although past editions of the Outlook have projected sharp drops in nuclear generating capacity at the end of the forecast horizon, extensions of operating licenses (or the equivalent) for nuclear power plants among the industrialized countries dampens the rate of decline in this year's forecast. Whereas nuclear capacity among the industrialized countries was projected to fall from 279 gigawatts in 1999 to 247 gigawatts in 2020 in last year's report, this year's projection shows a decline to 260 gigawatts. The greatest expansion in new nuclear capacity is, however, expected to occur among the developing nations, particularly in developing Asia where nuclear capacity more than doubles over the projection period, from 22 gigawatts in 1999 to 54 gigawatts in 2020.

IEO2002 is available on EIA's Web Site at http://www.eia.doe.gov/oiaf/ieo/index.html. Printed copies of the report will be available in April from the U.S. Government Printing Office or through EIA's National Energy Information Center, Room 1E-238, Forrestal Building, Washington, DC 20585, 202/586-8800. The World Energy Projection System, the model used to generate the projections that appear in IEO2002, will be available in May 2002, on EIA's Internet Web Site: http://www.eia.doe.gov/.

The report described in this press release was prepared by the Energy Information Administration, the independent statistical and analytical agency within the U.S. Department of Energy. The information contained in the report and the press release should be attributed to the Energy Information Administration and should not be construed as advocating or reflecting any policy position of the Department of Energy or any other organization.

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