World Oil Outlook - Opec

• In the case of biofuels, it is assumed that over the medium-term, first generation
biofuels production expands more rapidly than in the Reference Case:
China and India emerge as significant biofuels producers; future targets, as yet
unannounced, accelerate biofuels development; costs for advanced technologies
are reduced considerably, especially in the long-term; and already in the current
decade second generation technology becomes commercially viable. Taking all
this into consideration, the major changes occur in the longer term and by 2035,
total biofuels supply is assumed to reach 9.2 mb/d.
With these factors in mind, the LSS scenario has been developed. It portrays an
outlook that could be regarded as feasible. Table 4.5 documents the supply levels for
each of the elements of liquids supply in the scenario.
In this scenario, however, the surge of non-OPEC crude oil cannot be indefinitely
maintained. In fact, over the long-term, an accelerated exploitation of the finite
resources available, even with the larger URR assumption, points to resource
constraints for some regions emerging over the projection period. Additionally, the
assumption for additional shale oil foresees a similarly accelerated supply over the next
10–15 years, but this rapid expansion does not continue indefinitely in the scenario.
Thus, since demand is assumed to be unaffected in this scenario, OPEC crude supply
by 2035 has risen back to 26 mb/d after falling to below in 2025. But this is still well
below current output levels.
Possible implications for OPEC crude
The change in expectations relative to the Reference Case is startling in all three cases.
On the one hand, they demonstrate genuine concern over security of demand; on the
other, it has also been seen that circumstances could arise where considerably more
OPEC crude oil will be needed than the Reference Case suggests.
It is clear that the separate drivers, economy and supply surges are substantial elements
in their own way. Figure 4.1 brings together the implications for OPEC crude
supply in all three scenarios. The two downside risk cases involve either a stagnant call
on OPEC crude or a falling one, while the HEG scenario sees substantially higher
production levels. By 2035, the expectations for OPEC crude are very similar across
the downside risk scenarios, at 25–26 mb/d, while the HEG scenario sees the need for
OPEC crude to rise to over 43 mb/d.
Naturally, the feasibility of these OPEC supply paths needs to be questioned.
The dramatic fall in supply in the downside scenarios, as well as the rapid increase in
the HEG scenario may not be sustainable, in which case, the behaviour of the drivers
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