Plastics and other petrochemical products will drive global oil demand to 2050, offsetting slower consumption of motor fuel, the International Energy Agency (IEA) said on Friday. Despite government efforts to cut pollution and carbon emissions from oil and gas, the Paris-based agency said it expected the rapid growth of emerging economies, such as India and China, to propel demand for petrochemical products.
Petrochemicals that are derived from oil and gas feedstocks form the building blocks for products that range from plastic bottles and beauty products to fertilisers and explosives. Oil demand for transport is expected to slow by 2050 due to the rise of electric vehicles and more-efficient combustion engines, but that would be offset by rising demand for petrochemicals, the IEA said in a report. “The petrochemical sector is one of the blind spots of the global energy debate and there is no question that it will be the key driver of oil demand growth for many years to come,” IEA executive director Fatih Birol told Reuters.
Petrochemicals are expected to account for more than a third of global oil demand growth by 2030 and nearly half of demand growth by 2050, according to the world’s energy watchdog. Global demand for petrochemical feedstock accounted for 12mn bpd, or roughly 12% of total demand for oil in 2017. The figure is forecast to grow to almost 18mn bpd in 2050.
Most demand growth will take place in the Middle East and China, where big petrochemical plants are being built. Oil companies such as Exxon Mobil and Royal Dutch Shell plan to invest in new petrochemical plants in the coming decades, betting on the rising demand for plastics in emerging economies. In the Middle East, major producers such as Saudi Arabia and Kuwait are also investing in large petrochemical plants because in some cases they can make more money by converting crude oil directly into plastics rather than oil products such as gasoline and diesel, Birol said.
Plastics use has come under increased scrutiny as waste makes its way into the oceans where it harms marine life, prompting several countries to ban, partly ban or tax single-use plastic bags. But the IEA report said government efforts to encourage recycling in order to curb carbon emissions would have only a minor impact on petrochemical growth.
Sources and photo-credits: Gulf Times, Reuters