Macro Oils long-term 2021 outlook to 2050 Report

Commodity Market Report 31 May 2021

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Report summary

As post-Covid recovery gathers momentum, so does the prospect for an accelerated de-carbonization. In our long-term 2021 outlook, with long-term demand projections revised down substantially, the industry needs to adapt to the challenge of a shifting landscape. However, robust investment is still required on the supply side to offset production declines in order to meet 96 million b/d of global demand in 2050. Key topics include: • When does global demand peak, and how far does it fall by 2050? • The challenge for US Lower 48 as core inventory is exhausted and producers face weaker long-term prices • The increasing reliance on OPEC barrels post-2030 • What is the trajectory of EV adoption and its impact on oil demand?

Global supply: emphasis on long-term downgrades
- Non-OPEC: near term growth turns to decline in the mid-2030s, which accelerates post-2040
- North America - the key growth region and then the key area for declines in the long term
- US Lower 48: stronger activity recovery is expected in the near-term, but the long-term lower price has a profound impact on supply
- The recovery from 2020 lows has been uneven across the Lower 48
- Above ground challenges: investor scrutiny, operator consolidation and an evolving regulatory landscape
- Rest of North America – NGL and oil sands supply lead growth, minor downgrades overall
- Latin America – deepwater projects underpin strong growth
- Russia and Caspian: medium and long-term supply potential upgraded
- Africa: emerging production from Uganda and Kenya should stabilise output into the longer term
- Europe: minor growth to a secondary peak in 2023, then long-term decline
- Asia: overall liquids output will fall steadily through to 2050, but China and Australia fare best
- Impact of the energy transition on long term non-OPEC supply
- 27 million b/d of non-OPEC reserves growth, other discoveries and yet-to-find required by 2050
- OPEC capacity rises steadily through the 2030s; post-2040 downgrades lead to plateau
- Iraq development slows due to lack of investment following low oil price and revenues
- Iran: capacity stays flat as sanctions assumption remains unchanged
- UAE turns to unconventional oil in push to meet ambitious capacity targets
- Saudi Arabia crude capacity is assumed to remain close to 12 million b/d
- Minor revisions to rest of OPEC production
Global demand: Global liquids demand reaches a peak by 2034 and turns to structural decline
- Sector demand trends
- Fuel demand from light vehicles
- Risks to global liquids demand