OPEC "Living in a Time Warp" say Critics, As Cartel Releases its Latest World Oil Outlook

The World Oil Outlook updates its predictions on oil out to 2040.

In declaring itself to be "an efficient, reliable and economic supplier of oil," the Organization of Petroleum Exporting Counties (OPEC) in its latest World Oil Outlook released Wednesday has increased its long-term predictions for OPEC crude requirements and overall oil demand – prompting one major media outlet to dismiss the cartel as "living in a time warp."

In the World Oil Outlook, Abdalla Salem El-Badri, secretary general for OPEC, predicts oil demand will rise to 97.4 million barrels per day (bpd) by 2020, compared to 96.9 million bpd in last year's Outlook: an increase of 500,000 bpd.

El-Badri says by 2020, the requirement for OPEC crude will be 30.7 million bpd, a 1.7 million bpd increase from last year.

In looking farther down the road to 2040, the secretary general notes that further energy efficiency improvements and slightly lower long-term economic growth estimates will result in global demand at close to 110 million bpd, which is about 1 million bpd less than predicted in the last Outlook; he also pegs oil-related investment requirements between now and 2040 to be around $10 trillion.

Combined, oil and gas are expected to supply around 53 percent of the global energy mix by 2040, according to El-Badri, while gains in renewable alternative energy - mainly wind, solar, and geothermal - will amount to only a 4.3 percent share by 2040.

As Ship & Bunker previously reported on early extracts released from the Outlook, OPEC also assumes oil at $70+ per barrel in 2020, rising to $95 per barrel by 2040, as priced in 2014 dollars.

The Outlook also states that only 6 percent of passenger and commercial vehicles will be running on non-oil fuels by 2040.

The End of an Age

But the December 23 edition of The Telegraph challenges these predictions and dismisses OPEC as "living in a time warp, seemingly unaware that global energy politics have changed forever."

Of OPEC's 2040 crude demand figures, Ambrose Evans-Pritchard writes, "One is tempted to compare this myopia to the reflexive certainties of the 16th Century papacy."

Evans-Pritchard adds that OPEC's dismissal of alternative fuel vehicle growth "is a brave call, given that Apple and Google have thrown their vast resources into the race for plug-in vehicles," and that Goldman Sachs believes grid-connected vehicles will capture 22 percent of the global market within a decade.

He also quotes former Saudi Arabia oil minister Sheikh Ahmed Zaki Yamani, who he says warned The Telegraph 15 years ago about the rise of alternative energy by remarking, "Thirty years from now there will be a huge amount of oil - and no buyers; oil will be left in the ground.

"The Stone Age came to an end, not because we had a lack of stones."

In November, OPEC suggested that crude oil prices could remain under pressure until 2019.