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Year in review

Growth in energy markets slowed in 2019 in line with weaker economic growth and a partial unwinding of some of the one-off factors that boosted energy demand in 2018

This slowdown was particularly evident in the US, Russia and India, each of which exhibited unusually strong growth in 2018. 

 

China was the exception, with its energy consumption accelerating in 2019. As a result, China dominated the expansion in global energy markets – contributing the largest increment to demand for each individual source of energy other than natural gas, where it was only narrowly surpassed by the US.

 

Despite the support from China, all fuels (other than nuclear) grew at a slower rate than their 10-year averages, with coal consumption declining for the fourth time in six years. Nevertheless, renewables still provided a record increment to primary energy and provided the largest contribution (41%) to growth in primary energy, with the level of renewable power generation exceeding nuclear power for the first time.

 

The slowdown in energy demand growth, combined with a shift in the fuel mix away from coal and toward natural gas and renewables, led to a significant slowing in the growth of carbon emissions, although only partially unwinding the unusually strong increase seen in 2018.

 

Energy prices fell on the whole, particularly for coal and gas where growth in production outpaced consumption leading to a build-up of inventories. Oil prices were a little lower.

Primary energy and carbon emissions

Primary energy consumption rose by 1.3% last year, below its 10-year average of 1.6%,and much weaker than the 2.8% growth seen in 2018. By region, consumption fell in North America, Europe and CIS and was below average in South & Central America. Demand growth in Africa, Middle East and Asia was roughly in line with historical averages.

 

China was by far the biggest individual driver of primary energy growth, accounting for more than three quarters of net global growth. India and Indonesia were the next largest contributors, while the US and Germany posted the largest declines in energy terms.

 

Looking at energy by fuel, 2019 growth was driven by renewables, followed by natural gas, which together contributed over three quarters of the net increase. The share of both renewables and natural gas in primary energy increased to record highs. Meanwhile, coal consumption declined, with its share in the energy mix falling to its lowest level since 2003.

 

The combination of slower growth in energy demand and a shift in the fuel mix away from coal and toward natural gas and renewables led to a significant slowdown in the growth of carbon emissions. Emissions rose by 0.5%, although slower than their 10-year average, it only partially unwound the unusually strong growth of 2.1% seen in 2018.

Fuel shares of primary energy and contributions to growth in 2019

 Energy source   Consumption (exajoules)  Annual change (exajoules)  Share of primary energy   Percentage point change in share from 2018
 Oil  193.0  1.6  33.1%   -0.2%
 Gas  141.5  2.8  24.2%  0.2%
 Coal  157.9  -0.9  27.0%  -0.5%
 Renewables*  29.0  3.2  5.0%  0.5%
 Hydro  37.6  0.3  6.4%  0.0%
 Nuclear  24.9  0.8  4.3%  0.1%
 Total  583.9  7.7    
*Renewable power (excluding hydro) plus biofuels

41%

renewables’ contribution to the increase in
energy demand, the largest of any energy source.

Oil

Oil consumption grew by 0.9 million barrel per day (b/d), or 0.9% slightly lower than the 10-year average of 1.3%. Growth was led by China, where demand rose by 680,000 b/d, the largest increase in the country’s demand since 2015. Elsewhere in the developing world, growth was below-average, with Iran (180,000 b/d or 10%) the only major exception. OECD demand fell by 290,000 b/d, the first decline since 2014.

 

By product, consumption growth was led by ethane and LPG (380,000 b/d), helped by the substitution of naphtha in petrochemicals, with naphtha demand down slightly (-15,000 b/d). Diesel grew a little above average (360,000 b/d) as preparations for the International Maritime Organisation’s bunker fuel sulphur specification in 2020 lifted marine diesel demand. In contrast, this shift reduced demand for high sulphur fuel oil, contributing to a 320,000 b/d decline in fuel oil consumption.

 

Oil production fell slightly by 60,000 b/d in 2019 as strong non-OPEC production growth, led by the US, was offset by a sharp decline in OPEC production.

 

The US posted the largest increase of any country for the third consecutive year, with its output rising by a massive 1.7 million b/d, although this was down from the record increase in 2018 (2.2 million b/d). [dCR1] There was also significant growth from Brazil (200,000 b/d) and Canada (150,000 b/d), although in the latter’s case, this was a pronounced slowdown in growth compared to 2017 and 2018.

 

OPEC production fell by 2 million b/d, the group’s steepest decline since 2009. Much of this decline was driven by a combination of sanctions and economic difficulties in Iran (-1.3 million b/d) and Venezuela (-560,000 b/d). In addition, a renewed OPEC+ production cut agreement reduced other countries’ output levels, with Saudi Arabia’s production falling (430,000 b/d). Despite this agreement, the production of some OPEC members increased, notably Iraq and Nigeria which increased their production by 150,000 and 100,000 b/d respectively.

 

Looking at oil production by type, declines were concentrated in crude oil and condensate, which together fell by 580,000 b/d. Natural gas liquids (NGLs) continued to grow robustly, by 520,000 b/d (4.5%), in-line with its long-run trend. As has been the case in the last few years, NGLs output growth was driven primarily by the US (440,000 b/d), which has doubled its production between 2012 and 2019 to 4.8 million b/d.

 

Oil prices edged a little lower last year, with Dated Brent averaging $64.21/bbl compared with $71.31/bbl in 2018. 

-2mb/d

decline in OPEC oil production, the largest decline since 2009.

Top 5 increases and decreases in oil consumption and production

 Oil consumption  Annual change (thousand b/d)  Oil production  Annual change (thousand b/d)
 Increases
 China  681  US  1685
 Iran  183  Brazil  198
 India  159  Canada  150
 Algeria  37  Iraq  148
 Russia  35  Australia  135
 Decreases
 Mexico  -88  Iran  -1266
 Italy   -59  Venezuela  -556
 Pakistan  -52  Saudi Arabia  -429
 Taiwan  -52  Mexico  -150
 Venezuela  -47  Norway  -115
Refining and trade

 

Refinery throughput barely grew at the global level (30,000 b/d), held back by a slowing in oil consumption growth and robust growth in NGLs supplies. China was again the exception, with its crude runs growing by a record high of 950,000 b/d as new refineries ramped up. Throughput declined in most other regions, in particularly the US (-400,000 b/d) and South & Central America (-300,000 b/d), with the latter region posting its sixth consecutive annual decline.

 

Refining capacity rose by 1.5 million b/d, the largest increase since 2009. Growth was driven by additions in China (540,000 b/d) the Middle East (310,000 b/d) and the US (210,000 b/d) as well as by a record low level of refinery closures. Global refinery utilisation fell sharply, dropping by 1.2 percentage points to 82.5%, the largest annual decline since 2009.

 

Refining margins were slightly lower, with the average of the three region margins tracked in this book (US Gulf Coast, Northwest Europe and Singapore) falling from $5.4/bbl in 2018 to $4.7/bbl.

 

Oil trade fell by 230,000 b/d (0.3%) - the first decline since the financial crisis in 2009. Most of this decline was concentrated in crude oil trade: a sharp fall in Middle East crude exports (-1.4 million b/d), mainly due to Iranian sanctions, was only partially offset by continued growth in US crude exports (0.9 million b/d), while falling US crude imports (-1 million b/d) broadly offset strong growth in Chinese purchases (0.9 million b/d). Overall, net oil imports into the US (including products) fell by 1.8 million b/d to only 1.1 million b/d, down from net imports of 9.5 million b/d ten years earlier.

Natural gas

Consumption and production

 

Global natural gas consumption growth averaged 2% in 2019, below its 10-year average and down sharply from the exceptional growth seen in 2018 (5.3%). In volume terms, demand grew by 78 billion cubic metres (bcm), led by the US (27 bcm) and China (24 bcm).

 

The growth in US and Chinese gas consumption was much slower than in 2018, as the boost from weather effects and policy driven coal-to-gas switching in China faded. A reduction in the number of unusually hot and cold days also contributed to a fall in Russia’s gas consumption (10 bcm) – the largest decline of any country last year.

 

Gas production grew by 132 bcm (3.4%) outpacing growth in consumption. The US accounted for almost two-thirds of net global growth, with the volumetric increase of 85 bcm just shy of 2018’s record increment (90 bcm). Supply was also boosted by strong growth in Australia (23 bcm) and China (16 bcm).

 

Trade

 

Much of last year’s increase in gas production was used to feed additional exports of liquefied natural gas (LNG). LNG exports grew by 54 bcm (12.7%) last year, the largest annual increase ever, driven by record increases from the US (19 bcm) and Russia (14 bcm) as well as continued growth from Australia (13 bcm).

 

On the LNG import side, nearly all incremental supplies headed to Europe, in contrast to 2018 when Asia drove import growth. European LNG imports rose by 49 bcm, representing an unprecedented 68% increase. Growth was widespread, with the UK (11 bcm), France (10 bcm) and Spain (7 bcm) the largest individual contributors.

 

The rapid growth in LNG led to a 4.9% increase in overall inter-regional gas trade, a rate more than double its 10-year average. This is despite a 1.7% decline in pipeline trade (-9 bcm) as pipeline imports into Europe from Russia and North Africa were partially crowded out by the abundance of LNG supplies.

Top increases and decreases in LNG exports and imports

 LNG exports  Annual change (bcm)
 Increases
 US  18.9
 Russia  14.4
 Australia  12.9
 Algeria  3.5
 Egypt  2.6
 Decreases
 Indonesia  -4.3
 LNG imports  Annual change (bcm)
 Increases
 China  11.3
 United Kingdom  10.9
 France  10.1
 Spain  6.9
 Italy  5.3
 Decreases
 Japan  -7.5
 South Korea  -4.6
 Egypt  -3.2
 Argentina  -1.9
 Chile  -1.0
Prices
 

With production growth outpacing growth in consumption by a considerable margin, storage levels rose in most regions and prices fell sharply. US Henry Hub prices dropped almost 20% to average $2.53/mmbtu, while European and Asian prices, as measured by the UK NBP index and the Japan Korea Marker, fell by more than 40% (averaging $4.47/mmbtu and $5.49/mmbtu respectively). Prices in Europe, the region most affected by LNG oversupply, fell to their lowest levels since 2004.

54bcm

increase in liquefied natural gas supplies the largest increase on record.

Coal

Consumption and production

 

World coal consumption fell by 0.6% (-0.9 EJ), its fourth decline in six years, displaced by natural gas and renewables, particularly in the power sector (see electricity section). As a result, coal’s share in the energy mix fell to 27.0%, its lowest level in 16 years.

 

Coal consumption continued to increase in some emerging economies, particularly in China (1.8 EJ), Indonesia (0.6 EJ) and Vietnam (0.5 EJ), with the latter posting a record increase in part related to a sharp drop in hydroelectric power. Growth in India, usually a key driver of coal consumption, was only 0.3% (0.1 EJ) – its lowest since 2001. These increases in coal consumption were more than offset by falls in demand in the developed world, led by the US (-1.9 EJ) and Germany (-0.6 EJ), with OECD coal consumption falling to its lowest level in our data series (which goes back to 1965).

 

Global coal production rose by 1.5%, with China and Indonesia providing the only significant increases (3.2 EJ and 1.3 EJ respectively). As with consumption, the largest declines in production came from the US (-1.1 EJ) and Germany (-0.3 EJ).

 

Coal prices fell last year, with the Northwest Europe and Chinese marker prices declining by 34% and 14% respectively (to $60.86/t and $85.89/t).

 

Coal trade

 

Coal trade decreased by 1.3%, the first decline since 2015. Notable declines in exports came from the US (-0.5 EJ), Australia (-0.4 EJ) and Colombia (-0.3 EJ) with strong growth in exports seen only in Indonesia (0.6 EJ). On the import side, falling imports in Europe (-1.2 EJ) and Japan & South Korea (-0.3 EJ combined) outweighed growth in the rest of Asia (1.3 EJ).

Renewables, hydroelectricity and nuclear

Renewables

 

Renewables energy consumption (which includes biofuels and all traded renewable electricity apart from hydro) continued to grow strongly, contributing its largest increase in energy terms (3.2 EJ) on record. This accounted for over 40% of the global growth in primary energy last year, which is larger than any other fuel. As a result, renewables increased its share in the energy mix from 4.5% in 2018 to 5%. 

Renewables share of primary energy in key countries and regions

 Renewables share of primary energy  Share in 2019  Percentage point change from 2018
 US  6.2%  0.4%
 Other N. America  4.0%  0.7%
 Brazil  16.3%  1.2%
 Other S&C America  4.3%  0.7%
 EU  11.0%  1.0%
 Other Europe  4.3%  0.7%
 CIS  0.1%  0.0%
 Middle East  0.3%  0.1%
 Africa  2.0%  0.5%
 OECD Asia  5.0%  0.9%
 China  4.7%  0.4%
 Other Asia  2.9%  0.4%
 World  5.0%  0.5%

By energy source, wind generation provided the largest contribution to growth (1.4 EJ) followed closely by solar (1.2 EJ). Other sources of renewable electricity (such as biomass and geothermal) grew by 0.3 EJ, while biofuels consumption increased by 0.2 EJ, or 100,000 barrels of oil equivalent per day.

 

China’s use of renewables grew by more than any other country, although its increase of 0.8 EJ was below the strong rate of growth seen in 2017 and 2018 (1.2 EJ both years). Solar provided half of China’s growth, followed by wind (around 40%). The US (0.3 EJ) and Japan (0.2 EJ) were the next largest individual contributors to growth.

 

 

Hydroelectricity and nuclear

Hydroelectric generation rose by 0.8%, below its 10-year average of 1.9%. Growth was led by China (0.6 EJ), Turkey (0.3 EJ) and India (0.2 EJ). The US and Vietnam saw the biggest declines (both -0.2 EJ).

 

Nuclear generation increased by 3.2%, its fastest growth since 2004 and well above the 10-year average of -0.7%. As in 2018, China recorded the largest increment of any country and, last year, it was also its biggest increase ever (0.5 EJ). Japan also posted notable growth of 0.15 EJ (33%) as it continued to recover from the impact of the Fukushima incident in 2011.

 

 

Electricity

Generation of electricity grew by only 1.3% last year, around half of its 10-year average. Growth was weak or negative in most regions, other than in China which increased by 340 TWh (4.7%), accounting for 95% of net global growth (360 TWh).

 

Renewables provided the largest increment to power generation (340 TWh), followed by natural gas (220 TWh). These gains came partially at the expense of coal generation which fell sharply (-270 TWh), causing the share of coal in power generation to fall by 1.5 percentage points to 36.4% - the lowest in our dataset (which goes back to 1985). Despite this, coal remained the single largest source of power generation in 2019. Meanwhile, the share of renewables in generation increased from 9.3% to 10.4%, surpassing nuclear generation for the first time.

10.4%

share of renewables in electricity generation, higher than nuclear for the first time.

Key minerals

After steep rises in prices for cobalt and lithium in 2017 and 2018, prices fell back sharply last year. Cobalt prices declined by over 50% while lithium carbonate prices slipped 31%. Production responded quickly to the drop-in prices, with cobalt production down 21.2%, largely due to a decline in the Democratic Republic of Congo. Lithium production fell 19.2%, driven mainly by lower Australian output.

 

Production of graphite and rare earth metals continued to ramp up, both growing around 12%. Graphite growth was driven largely by China and Mozambique, while rare earth output was lifted by China and the US, which increased output by 44%, leapfrogging Australia to become the world’s number two producer behind China.