Petrochemicals set to be the largest driver of world oil demand, says study

Petrochemicals – components derived from oil and gas that are used in all sorts of daily-use products — are becoming the largest drivers of global oil demand, in front of cars, planes and trucks, according to a major study by the International Energy Agency (IEA).

Petrochemicals – used in products such as plastics, fertilisers, packaging, clothing, digital devices, medical equipment, detergents and tyres – are set to account for more than a third of the growth in world oil demand to 2030, and nearly half the growth to 2050, adding nearly 7 million barrels of oil a day by then.

They are also poised to consume an additional 56 billion cubic metres (bcm) of natural gas by 2030, and 83 bcm by 2050, said The Future of Petrochemicals report.

“Our economies are heavily dependent on petrochemicals, but the sector receives far less attention than it deserves,” said Dr Fatih Birol, the IEA’s Executive Director.

“Petrochemicals are one of the key blind spots in the global energy debate, especially given the influence they will exert on future energy trends. In fact, our analysis shows they will have a greater influence on the future of oil demand than cars, trucks and aviation.”

According to the report, demand for plastics – the key driver for petrochemicals from an energy perspective – has outpaced all other bulk materials (such as steel, aluminium, or cement), nearly doubling since 2000.

Advanced economies currently use up to 20 times more plastic and up to 10 times more fertiliser than developing economies on a per capita basis, underscoring the huge potential for global growth, the IEA said.

The dynamism of the petrochemical industry is also driving new trends around the world. After decades of stagnation and decline, the United States has re-emerged as a low-cost location for chemicals production thanks to the shale gas revolution, and is now home to around 40% of the global ethane-based petrochemical production capacity, the report pointed out.

Meanwhile, the Middle East remains the lowest‑cost centre for many key petrochemicals, with a host of new projects announced across the region, it added.

The report was developed with input from governments, industry and other key stakeholders, and seeks to bring the sector the attention it deserves in the global energy policy debate. It also provides ten key policy recommendations to build a more sustainable and efficient petrochemicals industry.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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