Below are highlights from the introduction given by Bob Dudley, BP, Group Chief Executive at the launch of the BP Statistical Review of World Energy.
“2014, a remarkable year in the world of energy. The eerie calm that had characterised energy markets in the few years prior to 2014 came to an abrupt end last year. However, we should not be surprised or alarmed. Indeed, to someone who has worked in the energy business for over 30 years, the volatility and uncertainty that characterised 2014 felt like a return to more normal conditions.
“But neither should the events of 2014 be dismissed as just another bout of cyclical instability. Rather, they may well come to be viewed as symptomatic of a broader shifting in some of the tectonic plates that make up the energy landscape, with significant developments in both the supply of energy and its demand. Those developments had profound implications for prices, for the fuel mix, and for carbon emissions.”
Demand and supply
“The most significant development on the supply side in 2014 was undoubtedly the continuing revolution in US shale. The US recorded the largest increase in oil production in the world, becoming the first country ever to increase average annual production by at least 1 million bpd for three consecutive years. The US replaced Saudi Arabia as the world’s largest oil producer, a prospect unthinkable a decade ago. The growth in US shale gas in recent years has been just as startling, with the US overtaking Russia as the world’s largest producer of oil and gas.
“The developments on the demand side were no less striking as the growth in energy demand slowed sharply. Global primary energy consumption increased by just 0.9% in 2014, its slowest rate of growth since the late 1990s, other than immediately after the financial crisis. This slowing was driven in part by the rebalancing of the Chinese economy away from energy intensive sectors causing the growth of energy consumption in China to slow to its lowest rate since 1998. Even so, China remained the world’s largest growth market for energy.
“As we have seen, these shifts in supply and demand had major effects on energy prices, particularly oil prices. The fall in oil prices looks to have been largely driven by the strength of supply as non-OPEC production grew by a record amount and OPEC maintained its production levels in order to protect its market share. These developments also had important implications for the fuel mix. The slowing pace of Chinese industrialisation caused the growth in Chinese coal consumption to stall and the growth in global consumption of coal to be unusually weak. Global growth in natural gas was also weak, held back by mild European winter triggering a sharp fall in European gas consumption. Renewables were again the fastest growing form of energy and, in a year when global consumption growth slowed sharply, they accounted for one third of the increase in total primary energy use. Renewables provided approximately 3% of the world’s energy needs.
“The deceleration in global energy demand and shift in the fuel mix had a marked impact on carbon emissions. Our calculations suggest that global CO2 emissions from energy use grew by just 0.5% in 2014, the weakest since 1998, other than in the immediate aftermath of the financial crisis.
“So it was a year of great change an our task as an industry is to respond in such a way as to meet today’s challenges while continuing to invest to meet tomorrow’s demand, safely and sustainably.”
Edited from press release by Claira Lloyd