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IEA: US Largest Global Oil Producer by About 2020

November 13, 2012 By Jessica Lyons Hardcastle

The US is projected to be the largest global oil producer by about 2020 — overtaking Saudi Arabia until the mid-2020s — according to International Energy Agency’s 2012 World Energy Outlook (WEO).

The WEO forecasts that the extraordinary growth in oil and natural gas output in the United States will mean a sea-change in global energy flows. In the New Policies Scenario, the WEO’s central scenario, the United States becomes almost self-sufficient in energy, in net terms, by 2035.

North America emerges as a net oil exporter, accelerating the switch in direction of international oil trade, with almost 90 percent of Middle Eastern oil exports being drawn to Asia by 2035. Links between regional gas markets will strengthen as liquefied natural gas trade becomes more flexible and contract terms evolve.

While regional dynamics change, global energy demand will push ever higher, growing by more than one-third over the period to 2035, according to the WEO. China, India and the Middle East account for 60 percent of the growth. Meanwhile, demand barely rises in OECD countries, which see a shift away from oil, coal and in some countries, nuclear, and toward natural gas and renewables.

Fossil fuels will remain dominant in the global energy mix, WEO says, supported by subsidies that, in 2011, jumped by almost 30 percent to $523 billion, due mainly to increases in the Middle East and North Africa. Global oil demand grows by 7 mb/d to 2020 and exceeds 99 mb/d in 2035, by which time oil prices reach $125/barrel in real terms (more than $215/barrel in nominal terms).

A surge in unconventional and deepwater oil boosts non-OPEC supply over the current decade, but the world relies increasingly on OPEC after 2020. Iraq accounts for 45 percent of the growth in global oil production to 2035 and becomes the second-largest global oil exporter, overtaking Russia, according to the report.

While the regional picture for natural gas varies, the global outlook over the coming decades looks to be bright, as demand increases by 50 percent to 5 trillion cubic metres in 2035. Nearly half of the increase in production to 2035 is from unconventional gas, with most of this coming from the United States, Australia and China.

Renewables become the world’s second-largest source of power generation by 2015 and close in on coal as the primary source by 2035, according to the report. However, this rapid increase hinges on continued subsidies. In 2011, these subsidies — including for biofuels — totaled $88 billion, but over the period to 2035 need to amount to $4.8 trillion; over half of this has already been committed to existing projects or is needed to meet 2020 targets.

 


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