Petrochemicals: a key driver of demand growth
The fastest-growing source of global oil demand growth are petrochemicals, particularly in the United States and China. The shale revolution in the United States has opened up a major source of cheap domestic feedstock. About 1.7 mb/d, or 25%, of our total demand growth to 2023 is taken up by ethane and naphtha. Global economic growth is lifting more people into the middle class in developing countries and higher incomes mean sharply rising demand for consumer goods and services. A large group of chemicals derived from oil and natural gas are crucial to the manufacture of many products that satisfy this rising demand. Examples include personal care items, food preservatives, fertilisers, furnishings, paints and lubricants for automotive and industrial purposes.
One of the biggest and most pressing issues is the implementation of major changes to marine fuel specifications mandated by the International Maritime Organisation (IMO). The new rules loom ever closer and the maritime and refining industries face a huge challenge to implement them. From the vantage point of early 2018, it is not clear how successful they will be, especially as demand for non-marine gasoil grades is growing steadily. The new regulations will cause a massive switch out of high sulphur fuel oil demand and into marine gasoil or a new very low sulphur fuel oil. The total demand for oil products will not be dramatically altered, but the impact of the changes on the product mix is a major uncertainty in our forecast.