IEEJ：June 2016○ｃ IEEJ 2016

Special Bulletin

A Japanese Perspective on the International Energy Landscape (276)June 16, 20162015 Global Energy Situation Seen from BP Statistics
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn June 8, international oil major BP released its BP Statistical Review of World Energy
2016. As introduced in four of my past special bulletins (94th, 135th, 177th and 224th), the BP
Statistical Review is one of the most representative international energy supply and demand statistics
in the world. Energy experts throughout the world refer to the BP Statistical Review known as being
comprehensive and covering the latest annual data. Based on the BP data, the following reviews theinternational energy situation in 2015.

First, the year 2015 saw a clear slowdown in growth in primary energy demand in theworld as in the previous year. Primary energy demand in the world in 2015 totaled 13.15 billion tonsof oil equivalent (TOE), up only 1.0% from the previous year. The growth rate was slower than 1.1%
in 2014 and the lowest in the past period from 2000, excluding 2009 when primary energy demand
posted a 1.5% decline amid global recession triggered by the Lehman Shock. While demand in themember countries of the Organization for Economic Cooperation and Development (OECD) posted
a small rise of 0.1% in 2015 after a 0.7% decline in 2014, the non-OECD demand growth narrowed
from 2.6% to 1.6%, contributing greatly to decelerating the global demand growth. Non-OECD
demand which accounts for 58% of global energy consumption was decelerated in 2015, which
contributed to easing the international energy supply-demand balance, together with expanding
energy supplies.

Second, demand by energy source in 2015 showed that renewable energy (excludinghydro) scored a remarkable demand expansion of 15.2%. Of the overall primary energy demand
increase of 127 million TOE in 2015, renewable energy accounted for 48 million TOE or 38%.
Leading the growth was wind and solar energy that diffused fast globally. Fossil fuels oil and gas
also made great contributions to the demand increase, accounting for 80 million TOE and 54 million
TOE, respectively. Meanwhile, the biggest change in 2015 was a large drop of 1.8% in coalconsumption. The drop was the largest since 1.4% in 2009 or even since 1970. Of the coal demand
decline of 71 million TOE, the United States and China accounted for 57 million TOE and 29
million TOE. The substantial coal consumption drops in the two countries were a major factor
behind the global coal consumption decline and the easing coal supply-demand balance.
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Third, an energy demand growth slowdown in China as the world’s largest energy
consumer became clearer in 2015. While China’s primary energy demand accounted for 3.01 billion
TOE or 23% of the global demand in 2015, its primary energy demand growth rate of 1.5% was thelowest since 2000. Plagued with a soft landing at the New Normal, China saw its energy demand
growth decelerate for the fourth straight year, since an 8.1% increase in 2011. While renewable andnuclear energy demand scored substantial increases of 21% and 29%, respectively, coal demandaccounting for the largest share of 64% of total primary energy demand in China posted aremarkable fall of 1.5%. Chinese coal consumption decreased for the second consecutive year,
reflecting oversupply in the steel, power and construction sectors.

Fourth, the United States continued to substantially increase oil and gas production on thesupply side in 2015. U.S. oil production in the year totaled 12.7 million barrels per day, up 980,000
bpd or 8.9% from the previous year. U.S. oil production exceeded that of Saudi Arabia (12.01million bpd), remaining the largest in the world for two years. It topped the past peak of 11.3 million
bpd reached in 1970, hitting a new high for the second straight year. The expansion, though slower
than 1.66 million bpd in 2014, was coupled with an oil output increase of 750,000 bpd in Iraq and510,000 bpd in Saudi Arabia to support global supply and play a key role in easing the oil
supply-demand balance and lowering oil prices.

U.S. natural gas production in 2015 also posted a steady increase of 5.4% from theprevious year to 76.73 million cubic meters. U.S. natural gas output thus expanded for the 10thstraight year since it turned upward in 2006 amid the shale gas revolution ahead of the shale oil
output expansion. The United States replaced Russia as the largest gas producer in the world in 2009
and retained the position for seven years through 2015. In contrast to the United States, Russia, thesecond largest gas producer in the world, posted a 1.5% decline in gas output, falling for the second
consecutive year. In 2015, the United States remained the world’s largest oil and gas producer,
continuing to symbolize the great impact of the shale revolution.

While total primary energy demand slowed its increase in 2015, renewable energy(excluding hydro) recorded the very high growth of 15.2%, as noted above. Renewable energy
demand expanded both in OECD and non-OECD countries, scoring a 13.1% rise for OECDcountries and a 20.1% increase for non-OECD countries. By country, China, Germany, the UnitedStates and the United Kingdom posted especially remarkable growth in renewable energy demand.
Of the total renewable energy demand growth of 48 million TOE, wind power and solar energy
accounted for 28 million TOE and 14 million TOE, respectively, indicating their great contributions
to the total increase. While renewable energy demand has continued to expand under policy support,
renewable energy power generation costs have reportedly posted a substantial decline thanks to alearning effect. The substantial expansion in wind, solar and other renewable energy power
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generation coincided with price drops in the wholesale market for electricity, exerting some impacts
on the economic viability of fossil power generation. Meanwhile, the increase in intermittent
renewable energy power generation led to a steady rise in costs to address the intermittency.
Indications in 2015 were that this challenge would grow more significant in the world.

Contact: report@tky.ieej.or.jp
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