The coming of Dangote refinery is expected to reduce Africa’s crude export to 5.4 million barrel per day in 2025, says an outlook report by Organisation of Petroleum Exporting Countries (OPEC).
In its closely-watched annual World Oil Outlook (WOO), the Middle East-dominated producer group said significant additions are also expected in Africa with one large project in Nigeria accounting for the largest share.
“Due to the expected startup of the new Dangote refinery in Nigeria, crude exports from Africa are expected to decline to 5.4 mbd by 2025,” said the World Oil Outlook, which presents OPEC Secretariat’s medium-term and long-term analysis of the energy market, as well as projections for the global economy.
OPEC said Africa now has the potential capacity, linked to the Dangote project in Nigeria, which changes the balance predominantly in West Africa.
It noted that the last 12 months had been “challenging” for energy markets. It revised its forecast for global oil demand growth over both the medium term and long term, citing tough market conditions and “signs of stress” in the world economy.
“Signs of stress have appeared in the global economy and the outlook for global growth, at least in the short- and medium-term, has been revised down repeatedly over the past year,” OPEC said.
The 14-member producer group said its own production of crude oil and other liquids is expected to decline over the next five years, falling to 32.8 million bpd in 2024, down from 35 million bpd in 2019 while also lowering its outlook numbers for global oil demand growth to 104.8mpd by 2024, and 110.6 million bpd by 2040.
“At the global level, growth is forecast to slow from a level of 1.4 million bpd in 2018 to around 0.5 million bpd towards the end of the next decade,” OPEC said in the report.
The report comes at a time when many energy market participants are increasingly concerned about a repeat of rising supply and faltering demand, the same situation that precipitated a dramatic fall in crude futures from mid-2014 to 2016.
OPEC admitted that it will continue to remain under pressure from rising US oil output. America has become the world’s top oil producer through developing hydraulic fracturing, commonly known as “fracking”, in states such as Texas and North Dakota.
“The main driver of medium-term non-OPEC supply growth remains overwhelmingly U.S. tight oil,” OPEC said in its latest World Oil Outlook, using another term for shale oil.
The OPEC’s outlook report noted that oil accounted for more than 31 percent of global energy demand in 2018, ahead of coal at 27 percent, and gas at 23 percent. Over the next 20 years, oil is projected to still remain the largest contributor to the energy mix, accounting for more than 28 percent, it said.
While natural gas is not expected to overtake oil in the forecast period, it will grow from 65.6mboed to 90mboed, becoming the second-largest energy source with 25 percent of the energy mix, while renewables will see growth of around 6.9 percent between 2018 and 2040.
“Demand increases for gas will come primarily from Asia, led by China and India, as well as OPEC Member Countries,” the group said.
OPEC said electric cars sales were “gaining momentum”, despite representing a very small share of the global fleet at present. They are expected to account for almost half of all new passenger cars in OECD countries by 2040, with almost a quarter of those in China and more than 26 percent globally.
OPEC’s supply has been gradually dwindling in recent years, partly because of a pact with Russia and other non-OPEC members to support the market. The group, sometimes referred to as OPEC and allied members, is expected to restrain oil production in 2020.
OPEC and its partners are due to meet next month in Vienna, and will consider whether to deepen their current output cutbacks to avert another glut in 2020, according to the organisation’s Secretary-General Mohammad Barkindo. Russia, the most important of OPEC’s allies, has been more cautious in signalling what needs to be done.
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