OPEC DOMESTIC OIL CONSUMPTION: IMPACT ON EXPORT POTENTIAL

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• Document Number (FOIA) /ESDN (CREST): CIA-RDP84S00558R000500120004-3
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• Document Creation Date: December 22, 2016
• Document Release Date: December 15, 2010
• Sequence Number: 4
• Publication Date: September 1, 1983
• Content Type: REPORT

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Impact on Export Potential
OPEC Domestic Oil Consumption:
Gonfidentizo
GI 83-10189
September 1983
436
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OPEC Domestic Oil Consumption:
Impact on Export Potential
This paper was prepared by
with a contribution from
the Office of Global Issues.
Comments and queries are welcome and may be
directed to the Chief, Energy Issues Branch, OGI,
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GI 83-10189
September 1983
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Summary
Information available
as of 15 July 1983
was used in this report.
Impact on Export Potential 25X1
OPEC Domestic Oil Consumption.
Based on an analysis of recent trends in domestic oil consumption in OPEC
countries and prospects for economic growth and development through
1990, we believe OPEC oil use will increase from the current level of 3.5
million b/d to about 5 million b/d in 1990. This is substantially lower than
forecasts just two to three years ago that OPEC oil demand at the end of
this decade would be in the 6.5- to 7-million b/d range. Even though the
growth in oil consumption will be slower than previously anticipated, the
1.5 million b/d expected rise in use will cut into the amount of oil available
for export. Another factor reducing export availability will be the erosion
of OPEC's oil productive capacity as natural declines in the recoverability
of crude oil take place in the more mature fields. Altogether, we expect
OPEC's exportable oil surplus-including natural gas liquids-will ap-
proximate 27 million b/d in 1990, about 3 million b/d below present levels.
Our projection of OPEC's domestic oil demand is below earlier estimates
because:
? Lower oil revenues have led to cutbacks in energy-intensive industrial
development programs. These cutbacks should reduce future energy
demand levels.
? Recent domestic product price increases in most countries should
continue to restrain consumption growth and improve the efficiency of oil
use within individual economies.
? Alternative energy sources, particularly natural gas in the electric power
and industrial sectors, will be substituted for oil.
We believe the greatest uncertainty concerning future levels of OPEC oil
use is the effect reduced oil revenues will have both on internal demand
and on the ability of individual countries to maintain oil production at
adequate levels. Financial problems will slow overall economic growth and
should lead to smaller increases in future energy demand. At the same
time, revenue shortfalls are likely to mean that some oil productive
capacity may not be expanded, or even maintained at current levels.
By 1990 OPEC's domestic oil consumption could amount to about 15
percent of its available productive capacity. The impact of rising internal
use on members, however, will be uneven. In a number of countries the
combination of increased demand and a reduction in sustainable oil
productive capacity will substantially reduce their ability to export oil. The
major losers will be Indonesia and Nigeria. Indonesia could lose over half
its current export capacity of 1.1 million b/d; at today's prices, the amount
Confidential
G183-10189
September 1983
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represents over $5 billion annually in revenues. Nigeria faces the loss of
400,000 b/d in exports, or about $4 billion in yearly sales. In both cases the
reduced earning capability of the oil industry could pose severe financial
hardships. At a minimum, it will constrain economic development poten-
tial. In the case of Saudi Arabia, the exportable surplus will shrink to about
8.6 million b/d by the end of the decade. As recently as 1980 the Saudis
had an export capacity of 10.1 million b/d.
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OPEC Domestic Oil Consumption:
Impact on Export Potential F_
Introduction
In 1979-80 many market forecasters began to focus
attention on the rapid growth in OPEC's internal oil
consumption and the significant impact it could have
on oil availability for the West. More recently, how-
ever, the dramatic drop in oil consumption in the
industrialized nations and the simultaneous increase
in non-OPEC oil supplies have acted to reduce the
immediacy of the problem. Still, the volume of oil
consumed by OPEC members is now substantial, and
our projections of expected growth in internal OPEC
demand through 1990 could further reduce the oil
surplus available to Western nations. OPEC con-
sumption amounted to about 3 percent of the organi-
zation's available oil productive capacity in 1970;
presently it is about 11 percent, and we believe it
could reach 15 to 20 percent by 1990. Increased
domestic consumption could also affect individual
OPEC members unequally, potentially reducing ex-
portable oil surpluses and badly needed revenue flows
in countries such as Indonesia and Nigeria, where
growing populations are putting severe pressure on
government budgets.
Trends in OPEC Oil Consumption
Low levels of economic development in OPEC coun-
tries kept oil consumption almost stagnant until the
early 1960s. The rapid increase in oil production from
9.4 million b/d in 1960 to 31 million b/d by 1973,
however, sparked a concerted drive by OPEC mem-
bers toward development and modernization. The
resultant increase in economic activity led to a rise in
oil consumption from 500,000 b/d in 1960, the year of
OPEC's founding, to 1.6 million b/d by 1973. Be-
tween 1973 and 1982, OPEC domestic oil consump-
tion more than doubled to 3.3 million b/d.
? Consumption in Saudi Arabia, Iran, and Iraq rose
700,000 b/d to 1.5 million b/d last year, and
currently these three countries account for over 45
percent of the OPEC total.
? In six other countries-Indonesia, Nigeria, Algeria,
Venezuela, Ecuador, and Gabon-consumption in-
creased 120 percent, to more than 1.3 million b/d in
1982.
Table 1
OPEC: Projected Domestic
Oil Demand a
Algeria
62
120
138 165
205
Ecuador
31
76
89 110
140
Gabon
9
12
14-17
22
Indonesia
182
405
458
560
870
Iran
425
586
530
650
860
Iraq
80
207
229
275
330
Kuwait
115
110
153
155
185
Libya
33
93
110
135
180
Nigeria
52
174
208
245
315
Qatar
3
9
12
16
22
Saudi Arabia
336
594
775
935
1,125
Venezuela
271
393
425
470
570
Total OPEC d
1,603
2,860
3,250
3,863
4,979
a Includes bunkers and refinery losses.
b Estimated.
Projected.
d Because of rounding, components may not add to totals shown.
? Kuwait, the UAE, Libya, and Qatar saw demand
grow 150 percent since 1973, reaching almost
400,000 b/d last year
Since 1979 OPEC and official country statistics show
oil consumption growth rates in most OPEC countries
slowing. Revolution and war significantly depressed
consumption in Iran and Iraq-two members who
accounted for over one-fourth of OPEC oil demand in
1980-by an estimated 200,000 b/d in 1981-82, while
a general slump in economic activity because of
declining oil revenues is now affecting the rest of
OPEC.
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Table 2
OPEC: Oil Export Availability in 1990 a
? Hikes in domestic oil prices are also slowing con-
Maximum
Sustainable
Capacity
Domestic
Consumption
Available
Exports
Total
31.9
5.0
26.9
Algeria
0.6
0.2
0.4
Ecuador
0.2
0.1
0.1
Gabon
0.1
NEGL
0.1
Indonesia
1.4
0.9
0.5
Iran
3.5
0.9
2.6
Iraq
4.5
0.3
4.2
Kuwait
1.5
0.2
1.3
Libya
2.2
0.2
2.0
Neutral Zone
0.4
0.0
0.4
Nigeria
1.8
0.3
1.5
Qatar
0.5
0.5
Saudi Arabia
9.0
1.1
7.9
UAE
2.3
0.2
2.1
Venezuela
2.2
0.6
1.6
sumption growth in most OPEC countries.
Economic Growth and Development. The surge in
OPEC oil revenues since 1973, which led to sustained,
high rates of economic growth and extensive internal
development within most of the member countries,
has kept OPEC domestic oil consumption growing at
a rate over 8 percent per year between 1973 and 1982.
Economic data from member countries indicate that
rising per capita income is increasing demand for oil
in transportation, electric power generation, and resi-
dential use. Large amounts of capital have been
placed into development of energy-intensive indus-
tries, further accelerating internal demand for oil as
the OPEC economies expand.
Countries with large, exportable oil surpluses invested
heavily in major projects, including refineries, petro-
chemical plants, steel mills, and other heavy indus-
tries. Saudi Arabia, Iran, and Iraq, each able to
produce and export oil in excess of 3 million b/d by
the late 1970s, undertook the most ambitious pro-
grams, as detailed in their official development plans.
Because revenue flows until recently were very large
in relation to the size of the population and domestic
economy, nothing restrained the magnitude of the
capital investment in these projects.
Factors Affecting Oil Consumption
Rising oil revenue has been the key factor spurring
growth in OPEC domestic oil consumption, as in-
creasing per capita income and general economic
expansion raised demand for oil within member coun-
tries. Increased revenues also permitted investment in
large economic and industrial development programs,
many of which were energy intensive. At the same
time, domestic oil prices were kept low, accelerating
growth in local demand for petroleum products.
Countries with large populations-Indonesia, Nige-
ria, and Iran, for example-found oil an inexpensive
and convenient way to meet rising energy demand in
all economic sectors. Although these factors will
continue to underpin growth in OPEC domestic oil
consumption, recent events will modify the trends in
coming years:
? Lower oil revenues will slow economic expansion,
lowering the rate of growth in domestic oil demand.
? A number of large development projects are being
deferred or curtailed.
Those OPEC countries with large populations relative
to their oil exports found it necessary to spread oil
revenues across wider segments of the economy as
spending went toward a wide variety of economic and
social projects. Nonetheless, investment within these
"high absorbers"-Indonesia, Nigeria, Algeria, Vene-
zuela, Ecuador, and Gabon-has generally been
channeled into programs emphasizing energy-inten-
sive projects. Because their oil resources are generally
limited, most of this group has also sought to develop
other energy sources. Individual country development
programs and government budgets show that oil
income is being used to develop natural gas, coal, and
hydroelectric resources, thereby freeing more oil for
export. Government subsidies have also kept domestic
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oil prices low, however; and, as OPEC statistics
indicate, rising per capita income is rapidly increasing
? Even Qatar raised domestic oil prices in May, with
premium gasoline now selling for 62 cents per
internal demand for petroleum products.
OPEC members with small populations, large in-
comes, and few nonenergy natural resources-"low
absorbers"-such as Kuwait, the UAE, Qatar, and
Libya tended to invest in moderately sized energy-
intensive industries, such as refineries and petrochem-
ical plants. These projects generally were intended to
serve export markets. Large thermal electric power
and desalination plants were also constructed to serve
rapidly urbanizing populations, but most of these were
fueled with oil-associated natural gas that previously
had been flared. Rapidly rising per capita incomes
and heavily subsidized domestic oil prices kept de-
mand for private automobiles and commercial vehi-
cles high; and as OPEC consumption data indicate,
motor fuels are accounting for a large percentage of
overall oil consumption, particularly in the Middle
Eastern countries
Domestic Pricing Policies. OPEC governments his-
torically kept the domestic price of oil products low to
spread the benefits of their oil wealth and promote
economic growth. These subsidies spurred consump-
tion of oil, which became the "preferred" energy
source within most OPEC economies, as detailed in
member-country statistics and International Energy
Agency (IEA) studies on energy balances in the larger
OPEC nations. Recently, however, decreasing de-
mand for OPEC oil and lower oil prices have cut
deeply into oil revenues, squeezing budgets and spend-
ing by many members. As a result, most governments
have reduced their subsidies, and domestic oil prices
within OPEC are now approaching those in importing
countries, according to Embassy reporting and the
trade press:
? Ecuador recently scheduled petroleum product price
hikes that would double the cost of most products by
the end of the year, with premium gasoline now
about $1 per gallon.
? In January, Indonesia upped domestic prices for the
second straight year. Kerosene, the fuel consumed
in the largest amounts, rose from 32 to 54 cents per
gallon, and gasoline prices jumped 67 percent to
$1.85 per gallon.
gallon.
Based on Embassy reporting, price increases, particu-
larly for gasoline, appear to have been successful in
lowering domestic consumption rates in Indonesia,
Venezuela, and Ecuador. With oil export revenues
likely to remain low over the next several years, we
expect more price hikes ahead for domestic fuels as
governments continue to cut subsidies and budgetary
outlays. As economic activity picks up in the years
ahead, we believe these higher domestic price levels
will tend to moderate consumption growth rates from
those experienced in the past decade.
Fuel Substitution. According to OPEC Secretariat
papers, development of alternative energy sources has
been a goal for most members, and many have
succeeded at least in harnessing their associated
natural gas reserves. The tripling of oil prices in the
early 1970s substantially increased the opportunity
costs of flaring associated gas, and gathering networks
were installed, particularly in the Middle East. Offi-
cial OPEC statistics show that Kuwait, Saudi Arabia,
Qatar, the UAE, Algeria, Indonesia, and Venezuela
use most, if not all, of their associated gas for local
industries, electric power generation, petrochemical
plants, and natural gas liquid (NGL) processing cen-
ters. As long as minimum levels of oil production can
be maintained, gas will replace oil as the primary fuel
and feedstock in most of these systems. With limited
oil reserves, Algeria has developed its large, nonasso-
ciated gasfields, backing oil out of many sectors of the
economy. Similar gas reserves in countries such as
Qatar, Iran, and Libya, however, are now less likely to
be developed soon because of the problems of lower
revenues and high capital costs.
Development of other alternative energy sources, par-
ticularly hydroelectric power and coal, has been less
successful in meeting rapidly increasing electricity
demand. Our analysis indicates that high initial costs
and lengthy construction periods put hydroelectricity
at a competitive disadvantage compared with most
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oil-fired power plants. Venezuela and Iran have com-
pleted several large dams, and Embassy reporting
notes that Indonesia, Nigeria, and Ecuador are in the
midst of hydroelectric expansion programs
revenue problems are now
causing some delays, highlighting the vulnerability of
such projects to changing market conditions. The
same problems are being encountered with the devel-
opment of coal resources in Indonesia and Venezuela,
where exploitation is costly and time consuming.
Projects in these areas are susceptible to delay or
cancellation in times of tight budgets, especially if the
coal is of marginal quality,. as in Indonesia's case. F_
Population Growth. United Nations data project the
population of OPEC countries to grow by almost 100
million people to approximately 430 million by 1990,
a 2.6-percent average annual increase for the decade.
Indonesia, Nigeria, and Iran will add 69 million
people-roughly 70 percent of the overall OPEC
increase. This growth comes at a time when tradition-
al noncommercial energy sources for heating and
cooking-primarily wood and charcoal-are becom-
ing harder to find. Government development plans in
these countries call for rural electrification programs
to meet much of the additional residential demand,
but any construction delays in the electric power
projects will cause greater demand for kerosene as the
only alternative suitable for residential-sector use.F_
Oil Demand Through 1990
Based on the most recent complete data available on
domestic consumption, we have estimated oil con-
sumption through 1990 for each OPEC member by
both sector and fuel type, and by fuel type within
sectors. Because of data limitations, 1980 is the most
complete base year for estimates of future sectoral
consumption. We have also attempted to account for
the effects of shifts in fuel use arising from various
members' economic development and alternative en-
ergy programs.
Sectoral Oil Use. We expect the largest increase in oil
consumption to occur in the transportation sector.
Our projections show consumption of gasoline and
motor diesel fuels increasing from 1.2 million b/d in
1980 to over 2.1 million b/d in 1990 as the total
number of road vehicles more than doubles from
Figure 2
OPEC Domestic Oil Consumption:
Demand by Sector
1980 1985
Residential
Electric power'
Industrial
Transportation
9 million in 1980. Still, increases in motor fuel use
should slow sharply in this decade from the 15- to
18-percent annual growth rate of the 1970s. In most
countries, rising gasoline prices should contribute to
lower consumption; and, as a result of turnover in the
vehicle fleet, increased per capita travel in private
vehicles should be offset by increasing vehicle effi-
ciency.
In our judgment, bunker fuel use, which has declined
sharply since 1973 with the cutback in OPEC oil
exports, should rebound to almost 240,000 b/d by
1990. Growing bunker consumption for commodity
import shipments to OPEC countries will account for
most of the increase. Increased jet travel, particularly
in countries such as Saudi Arabia, Indonesia, and
Venezuela, will consume a larger proportion of kero-
sene, although total amounts used will remain rela-
tively small, under 190,000 b/d.
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OPEC statistics and official data from member coun-
tries indicate that, within sectors of the economy,
transportation has accounted for the largest increase
in oil use as the number of vehicles rose from 3.6
million in 1973 to over 9 million in 1980. The urban
movement-UN data indicate OPEC s urban popula-
tion grew two-and-one-half times to 105 million
people between 1960 and 1980-and industrialization
caused a large increase in demand for electricity,
boosting oil needs for power generation to 760,000
b/d by 1980. Residential kerosene use also rose
rapidly in the more heavily populated countries as
low prices and readily available supplies encouraged
the switch from more traditional fuels such as wood
and charcoal. In Indonesia and Iran residential kero-
sene use more than doubled over the 1970s, rising to
about 225,000 b/d by 1980. Consumption of bunker
fuels by oil tankers also soared, peaking in 1973
when bunkers accounted for almost one-third of total
OPEC oil consumption of 1.6 million b/d. Bunker
fuel consumption amounted to about 210,000 b/d in
Gasoline. A refined petroleum distillate suitable for
use as a fuel in spark-ignition internal combustion
engines.
Kerosene. A refined petroleum distillate used primar-
ily for lighting and heating, and as a fuel for certain
types of internal combustion engines. Aviation kero-
sene or jet fuel is also included in this category.
Distillates. A general term covering oils such as
diesel fuel or gasoil, which are suitable for use in
diesel or other compression ignition engines, or as a
burner fuel in certain heating installations, such as
residential or apartment buildings.
Residual Fuel Oil. A general term applied to an oil
used for production of power or heat, usually under
boilers or in industrial furnaces; most residual fuel
oils are also found to contain a small percentage of
sulfur, which differentiates residual fuel oil from the
lighter distillate fuels.
Other Fuels. This category includes petroleum prod-
1980.
Consumption of liquid fuels in the electric power
sector will grow by almost 600,000 b/d over the
decade to 1.3 million b/d by 1990, primarily because
of expansion of the electric power network in Saudi
Arabia and, to a lesser extent, Iran. The Saudis will
account for over one-half the increase as large power
and desalination plants are constructed in the western
section of the country, where natural gas will not be
available as an alternative fuel. Approximately 90,000
b/d of the increase will come in Iran, where we
believe delays in substituting natural gas in the power
sector will force Tehran to turn to oil as an alternative
fuel at least through 1990. We believe aggressive
programs by the remainder of the OPEC members to
expand their power sectors in the 1970s using alterna-
tive fuels-particularly natural gas-will result in
only minimal growth in demand for oil through 1990,
amounting to slightly over 4 percent per year. Total
OPEC electric generating capacity should reach 85
gigawatts ' by 1990, 80 percent above the 1980 level.
The proportion of nonoil units should surpass oil-
fueled plants after 1985 as natural gas and hydroelec-
tricity play a larger role.
ucts that are primarily used in nonenergy processes,
such as feedstocks for petrochemical production,
machinery lubricants, and asphalt for highways; it
also includes crude oil when used in oilfield opera-
tions or in electric power generation.
Bunkers. Any fuel oil or diesel fuel used to power
ships.
Refinery Losses. Oil lost in the process of refining
crude oil into petroleum products; this category also
includes crude oil or products used as fuel in the
refining process
Data Sources. Official country statistics and Embas-
sy reporting were supplemented with data from
OPEC, the Organization of Arab Petroleum Export-
ing Countries (OAPECJ, International Energy Agency
(IEA), and United Nations and World Bank energy
statistics. Department of Energy data were generally
used for bunker sales and refinery fuel and losses.
Data include petroleum-sector consumption normally
excluded from most domestic consumption figures.
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Two of the most populous OPEC countries-Iran and
Indonesia-make direct use of extensive quantities of
oil in the residential sector. Government statistics
show that kerosene is used primarily for cooking in
Indonesia and for heating in Iran. Iran is also the only
OPEC country to use significant amounts of distillate
fuels for home heating. Rapid population growth, the
shift from wood and charcoal, and low fuel prices will
encourage growth in kerosene consumption in these
two countries through the mid-1980s until substitutes
become more widely available. We project total resi-
dential demand to grow by about 75 percent over the
decade, to about 545,000 b/d in 1990. Most other
OPEC countries already rely more heavily on lique-
fied petroleum gas (LPG), natural gas, and electricity
for residential purposes.
OPEC's oil-processing and refining sectors account
for more than half of the industrial sector's oil
consumption. Most consumption occurs in oilfield
operations and from refinery losses, shrinkage, and
spillage. Although conversion to natural gas and
modernization of existing and new refineries should
slow the growth in the petroleum industry's oil con-
sumption, we believe a planned doubling of refinery
capacity by 1990 will still boost industrial use of oil
for refining. Cement and steel operations will account
for most of the remaining industrial use. Other non-
energy industrial uses of oil products-road construc-
tion, petrochemicals, and lubrication-account for the
remainder of OPEC oil consumption, and we expect
growth to increase at about the same rate as in the
recent past. Natural gas, however, will substantially
replace oil use in the petrochemical sector.'
Product Use. Our projection of fuel use by product
type indicates that distillate fuel consumption will
grow most rapidly between 1980 and 1990, rising
from 700,000 b/d to over 1.4 million b/d. As a share
of total consumption, distillate fuels will increase from
24 to 29 percent because of expanded use in both the
transportation and electric power sectors. Bunker fuel
use as a percentage of total oil consumption will show
the largest decrease, dropping from a 7-percent share
in 1980 to about 5 percent in 1990. In our view, shares
' For the purpose of this study, we have also placed into the
industrial sector all oil consumption listed in official statistics under
an "other" category, unless estimates of miscellaneous oil product
Figure 3
OPEC: Projected Product Demand
775
564
1,440
428
1,086
695
508
210
238
Other products
Bunkers
Losses
of total consumption of most other fuel types, includ-
ing gasoline, kerosene, and residual fuel oil, will
remain about the same over the decade. Despite the
expansion of OPEC's refining capacity in coming
years, newer technology will keep refinery losses at
about 5 percent of total consumption throughout the
Outlook and Implications
The major uncertainty affecting growth in OPEC
domestic oil consumption throughout the 1980s is the
impact of reduced oil revenues on economic growth
within member countries and investment in alterna-
tive energy programs. Loss of oil revenues has already
caused postponement of some phases of energy substi-
tution programs in certain OPEC countries, although
the near-term impact of most of these actions should
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Our oil consumption projection is generally in line
with most other recently published forecasts, all of
which are more pessimistic in their estimates of
growth in OPEC oil demand than studies published
by various organizations a few years earlier. The
1980 OPEC Secretariat report, for example, placed
1990 internal consumption at 6.3 million b/d exclud-
ing bunkers and losses. Most other estimates com-
pleted in 1980 rojected
OPEC consumption in 1990 below 5.5 million b/d.
Four studies that have become available within the
past year, however, now forecast demand ranging
from 4.3 to 5.3 million b/d, including bunkers and
In general they expect the greatest
growth in consumption to occur in the transportation
sector with distillate fuel accounting for the largest
increase in product demand.
be minimal. Later in the decade, however, the non-
availability of suitable alternative fuels could force
other countries into consuming greater quantities of
oil than we currently expect:
? Tighter budgets may delay expansion of Saudi
Arabia's master gas system, reducing gas availabil-
ity for industry later in the decade when Saudi
crude oil output returns to levels in the range of 7-8
million b/d; we estimate that the current gas short-
fall caused by low levels of oil output is forcing the
Saudis to burn an additional 70,000 b/d of liquid
fuels for local energy needs.
? Algerian delays in developing new gasfields will
reduce volumes available to meet export contracts
after 1985, a problem Algiers may have to solve by
slowing the substitution of gas for oil throughout the
economy.
Iran has revived dor-
mant plans to develop its natural gas reserves for
oilfield reinjection and increased domestic consump-
tion, but technical problems and lack of financing
could cause delays.
the
revenue crisis facing most OPEC countries is causing
reduced government spending, sluggish economic ac-
tivity, and less capital investment, especially in the
petroleum sector. Spending on projects designed to
maintain or expand oilfield productive capacity is
being curtailed. Over the longer run this could hasten
the decline in oil output from OPEC's more mature
producing fields:
? Saudi Arabia is delaying until the late 1980s plans
to develop medium and heavy oilfields offshore in
the Persian Gulf.
? Venezuela has canceled plans to exploit heavy-oil
deposits in the Orinoco River basin, effectively
postponing to the 1990s any large-scale production
from this area.
? A weak market and lower revenues have caused
participating oil companies in Nigeria and Indone-
sia to back off ambitious exploration and develop-
ment drilling campaigns.
Without the investment needed to offset capacity
erosion in older fields, some OPEC members will be
hard pressed to maintain adequate levels of oil exports
and revenues by the end of the 1980s.
In 1977 OPEC oil exports peaked at 29.9 million b/d.
We estimate that OPEC currently could export a
maximum of about 30 million b/d, including almost
3 million b/d of productive capacity now shut in
in Iraq. By 1990 the surplus available for export will
have dropped below 27 million b/d, potentially cost-
ing OPEC over $30 billion annually in oil revenues at
the current benchmark price of $29 per barrel. In
addition, today's soft oil market could cause further
complications for members forced to curtail invest-
ment in alternative energy programs. Their failure to
provide substitutes could eventually lead to higher-
than-anticipated growth in domestic oil consumption
in the post-1985 period, further reducing OPEC's
export potential while adding to the financial pres-
sures already facing some members.
25X1
25X1
25X1
25X1
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Table 3
OPEC: Leading Indicators
of Oil Product Use
Vehicles (million) 3.6
9.2 17 25
Electric capacity 14
(GM
47 73 85
Oil fired 10
26 36 40
Nonoil fired 4
21 37 45
Population (million) 281
335 380 430
Refinery capacity 4,152
(1,000 b/d)
5,500 8,600 9,712-10,915
Oil export availa- 29.5
bility a (million b/d)
25.0 29.9 26.9
a Actual exports for 1973 and 1980, including natural gas liquids.
Export capacities for 1985 and 1990 are based on estimates of
production capacity less domestic consumption and include natural
gas liquids.
While Saudi Arabia is not likely to face financial
problems as acute as those discussed above, we believe
export capacity will erode from the 1980 peak of 10.1
million b/d to an estimated 8.6 million b/d in 1990-
including one-half of the Neutral Zone production
and about 500,000 b/d in NGL. The loss-represent-
ing over $15 billion in yearly earnings at current
prices-is also the bulk of OPEC excess oil productive
capacity that would not be available later in the
decade should the West be faced with another oil
supply disruption.
The problem could be particularly acute for a number
of OPEC countries:
? Indonesia, a nation which obtains over 70 percent of
its export earnings from oil, faces a drop in its oil
export potential from the current 1.1 million b/d to
possibly less than half that in 1990, a potential
revenue loss of over $5 billion annually at today's oil
prices.
? Over 95 percent of Nigeria's export earnings come
from oil, and Lagos can ill afford a possible
400,000-b/d decrease in export capability by 1990,
an amount worth over $4 billion a year.
? Ecuador, OPEC's smallest exporter, still obtains
about 60 percent of its export earnings from oil, and
we estimate that its exportable surplus at the end of
the decade will be about one-half the current
120,000 b/d, with potential for revenue losses as
high as $600 million annually.
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Appendix
Fuel Consumption, by Country
OPEC
Total Domestic Oil Consumption, by Fuel Type
Kerosene
Distillate
250.1
279.3
345.9 415.6
512.4
581.8
639.0
694.7
801.3
884.0
974.9
1,086.0
1,440.0
Residual
189.7
203.5
238.2 274.8
290.4
350.4
377.6
508.0
565.0
624.3
654.2
704.0
900.0
Other
82.3
84.4
98.8 119.3
151.1
182.7
192.6
234.1
244.1
282.6
307.8
315.0
327.0
Bunkers
530.5
487.7
324.0 327.1
331.5
282.8
279.9
210.1
142.1
136.0
124.9
172.0
238.0
Losses
110.6
121.5
118.4 139.0
131.3
142.0
142.8
161.2
141.0
161.3
173.5
204.0
245.0
Total
1,603.2
1,682.0
1,707.1 1,959.8
2,213.6
2,415.9
2,587.2
2,860.3
2,986.7
3,250.5
3,460.7
3,863.0
4,979.0
a Estimated.
b Projected.
OPEC
Sectoral Oil Demand, by Fuel Type and Year a
Transport
Transport
Residential
Total
Transport
Electric
Residential
Total
625
90
2
93
214
8
0
1,230
818
126
4
31
202
10
0
1,587
0
388
15
0
0
0
403
818
564
1,0
86
876
315
204
3,863
1,054
187
5
86
278
15
0
2,120
0
5
5
84
694
50
0
1,333
0
523
20
0
0
0
543
1,054
775
1,4
40
1,138
327
245
4,979
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OPEC: Economic Profile, 1982
Algeria
Ecuador Gabon
Indonesia
Iran
Iraq
Kuwait
Libya
Nigeria
Qatar
Saudi
Arabia
United
Arab
Emirates
Venezuela
Million persons at
midyear
20.1
8.5
0.7
157.6
41.2
14.0
1.6
3.3
82.4
0.3
9.8
1.2
17.4
Percent increase
3.2
3.1
1.3
2.1
3.1
3.3
6.2
4.9
3.3
4.0
2.8
11.3
3.3
Gross national product
(billion 1982 US $)
42.5
12.0
5.3
93.7
69.7
27.1
23.7
17.8
57.4
7.2
132.7
25.8
72.5
Percent real growth a
5.0
2.0
5.0
6.5
-2.5
-2.1
3.0
-3.9
-11.0
3.0
5.2
10.0
-2.0
Per capita (1982 US $)
2,120
1,410
7,570
590
1,690
1,940
14,800
5,390
700
24,000
13,540
21,500
4,170
Oil industry
Crude oil production
(thousand b/d)
701
211
148
1,314
2,282
972
822 b
1,183
1,298
328
6,486 b
1,248
1,893
Average crude oil
production, 1978-82
(thousand b/d)
968
208
177
1,544
2,747
2,104
1,648 b
1,645
1,800
440
8,807 b
1,622
2,138
Peak production
(thousand b/d)
1,161
214
223
1,685
6,022
3,477
2,497 b
3,318
2,302
570
9,903 b
1,998
3,708
Year
1978
1979
1975
1977
1974
1979
1979
1970
1979
1973
1980
1977
1970
Refinery capacity
(thousand b/d)
436
79
20
341
530
220
623
130
260
12
875
135
1,284
Vehicles (thousand units)
747
215
36
1,195
1,425
260
535
568
850
61
1,385
530
1,933
Highways
(thousand kilometers)
78.4
69.3
6.9
93.1
85.0
20.8
2.5
19.3
108.0
0.8 c
30.1
0.8 c
77.8
Electricity generating
capacity (thousand
megawatts)
2.9
1.2
0.2
5.1
10.9
4.8
3.4
2.8
2.2
1.2
15.1
4.0
12.7
a Growth in GDP.
b Including about one-half of Neutral Zone production.
Excluding earth tracks, the mileage of which is undetermined.
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Algeria
61.7 60.9
70.1
82.9
93.9
95.2
115.6
120.1
127.3
137.6
145.0
165.0
205.0
Ecuador
31.1 32.6
38.5
43.9
50.6
61.9
71.9
75.7
81.6
89.2
97.0
110.0
140.0
Gabon
8.8 9.4
9.9
11.8
14.9
14.5
10.3
11.8
13.3
14.3
14.7
17.0
22.0
Indonesia
182.1 213.7
224.2
249.0
296.9
346.0
367.1
405.1
447.6
458.4
475.0
560.0
870.0
Iran
425.2 447.2
472.0
531.3
589.2
590.7
566.8
586.0
488.1
530.0
572.0
650.0
860.0
Iraq
80.4 90.5
103.6
121.2
137.8
162.4
185.2
207.2
211.6
228.5
246.0
275.0
330.0
Kuwait
115.1 89.8
93.8
102.0
102.7
110.1
125.3
109.6
127.1
152.9
169.0
155.0
185.0
Libya
32.8 37.4
51.4
56.2
66.6
74.3
87.3
93.4
101.2
109.7
118.0
135.0
180.0
Nigeria
51.5 56.3
68.8
90.7
113.3
135.8
156.3
173.6
200.1
208.1
217.0
245.0
315.0
Qatar
2.8 3.3
4.5
5.8
8.1
8.0
8.7
9.4
10.6
11.9
12.0
16.0
22.0
Saudi Arabia
335.6 362.4
285.6
354.2
401.7
439.3
483.9
593.7
668.0
774.9
844.0
935.0
1,125.0
UAE
4.8 7.1
25.6
31.7
47.9
55.9
58.3
81.9
102.3
109.8
118.0
130.0
155.0
Venezuela
271.3 271.4
259.1
279.1
290.0
321.8
350.5
392.8
407.9
425.2
433.0
470.0
570.0
OPEC total
1,603.2 1,682.0
1,707.1
1,959.8
2,213.6
2,415.9
2,587.2
2,860.3
2,986.7
3,250.5
3,460.7
3,863.0
4,979.0
a Estimated.
b Projected.
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Algeria
Domestic Oil Consumption, by Fuel Type
Gasoline
13.1
14.1
15.2 1
6.6
21.1
22.3
25.0
28.1
30.4
32.0
34.0
35.0
50.0
Kerosene
5.3
5.1
6.3
6.3
7.2
5.7
9.0
7.3
7.6
8.4
9.0
10.0
15.0
Distillate
15.6
21.5
28.2 3
1.1
35.8
35.6
39.7
39.0
42.2
47.6
50.0
55.0
75.0
Residual
15.5
7.4
7.1 1
1.1
10.0
8.5
6.0
6.0
4.5
4.0
4.0
5.0
5.0
Other
7.4
9.8
10.6 1
5.4
17.3
17.6
25.9
28.7
31.1
33.6
35.0
40.0
40.0
Bunkers
1.3
0.0
0.0
0.0
0.0
2.7
3.0
2.0
2.5
3.0
3.0
5.0
5.0
3.5
3.0
2.7
2.4
2.5
2.8
7.0
9.0
9.0
9.0
10.0
15.0
15.0
61.7
60.9
70.1 8
2.9
93.9
95.2
115.6
120.1
127.3
137.6
145.0
165.0
205.0
Estimated.
b Projected.
Algeria
Sectoral Oil Demand, by Fuel Type and Year
Electric 0 0
5 2 3 0 10
Industrial 0 0
0 4 26 9 39
Residential 0 2
0 0 0 0 2
Total 28 7
39 8 29 9 120
Industrial
5
5
35
15
60
Residential
0
0
0
0
5
Total
75
10
40
15
205
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Algeria's consumption of refined products grew by
9 percent annually between 1973 and 1982, reaching
almost 140,000 b/d last year. An ambitious gas
substitution program will probably slow growth over
the decade to an annual rate of about 5 percent, with
oil consumption reaching 205,000 b/d by 1990. At
that time, we expect natural gas to be supplying over
one-half the total energy needs of the country.
Transportation Sector
Transportation currently accounts for about 60 per-
cent of oil consumption. Limited port capacity and
slower domestic economic growth, however, should
slow the growth rate of the vehicle fleet for the
remainder of the decade. As a result, we believe oil
demand in the sector will increase from the present
80,000 b/d to about 130,000 b/d in 1990, or about
7-percent annual growth.
Electric Power Sector
Over the past several years, natural gas has been
displacing residual fuel oil and coal for electric power
generation in Algeria and currently accounts for 90
percent of electric power fuel requirements. We esti-
mate that only 10,000 b/d of residual and diesel oil is
currently used for electric power-mainly for small
plants and diesel generators in remote locations.
Although Algerian officials have stated plans to dou-
ble electric power capacity between 1980 and 1985
and again between 1985 and 1990, most of the new
plants will be fueled by natural gas. If electricity
demand exceeds supply, however, temporary increases
in the use of diesel fuels for power generation could
occur
currently consumed by industry.
Industrial Sector
Since 1970 more than one-half of Algeria's industrial
base has converted to natural gas, with bottled gas
accounting for much of the remainder. Industry
sources also indicate the Algerians are making a
concerted drive to switch their remaining manufactur-
ing plants, along with new steel and industrial proj-
ects, to gas. An estimated 45,000 b/d of oil is
Residential/Commercial Sector
Bottled gas and electricity are used extensively in the
residential and commercial sectors, reducing current
residential demand for kerosene to around 3,000 b/d.
We expect residential natural gas use will increase as
Algiers expands the distribution network, dropping
kerosene consumption even further
25X1
25X1
25X1
25X1
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Ecuador
Domestic Oil Consumption, by Fuel Type
Other
Bunkers
Losses
a Estimated.
b Projected.
1.4 0.5 0.4 0.4 1.7 0.8 3.0 1.9 2.0 2.2 2.0 _ 0.0 5.0 _
0.0 0.0 0.0 0.0 0.0 2.8 1.8 2.0 1.5 0.8 1.0 0.0 0.0-
1.8 0.4 0.1 0.4 0.3 2.8 2.0 3.0 0.9 1.0 1.0 0.0 0.0
Ecuador
Sectoral Oil Demand, by Fuel Type and Year
Transport 29 2 5 2 0 0 38
Electric 0 0 12 8 0 0 20
Industrial 0 0 0 7 2 3 12
Residential 0 6 0 0 0 0 6
8 17 17 2 3 76
Transport 40 5 _ 10 0 0 0 55
Electric 0 0 20 20 0 0 40
Industrial 0 0 0 10 0 0 _ 10
Residential 0 5 0 0 0 0 5
Transport 45 5 15 0 0 0 65
20 25 0 0 45
0 15 5 0 20
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Ecuador's official statistics show petroleum consump-
tion growing at an annual rate of about 12 percent
between 1973 and 1982. We believe consumption
growth rates will decline during the current decade-
averaging perhaps 6 percent annually-as eroding
petroleum export revenues force Quito to shelve ener-
gy-intensive development projects and boost domestic
energy prices. Petroleum product prices have been
raised several times over the last year, and premium
gasoline is now about $1 per gallon. A currency
devaluation now in progress, in addition to a further
slowing in domestic economic activity, should also
reduce the importation of vehicles in the years ahead,
slowing growth in oil demand in the transportation
sector. Consumption of oil for electricity generation
should increase only marginally in the late 1980s as a
number of new hydroelectric projects come on line.
After 1990 Quito's development plans call for new
electric power generating capacity to be fueled by
natural gas.
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Gabon
Domestic Oil Consumption, by Fuel Type
Gasoline
0.8
0.5
0.5
0.5
0.5
0.5
0.4
0.9
1.0
1.0
0.9
2.0
2.0
Kerosene
0.6
0.6
0.6
0.6
0.6
0.6
0.4
0.4
0.4
0.5
0.5
1.0
1.0
Distillate
2.6
2.5
2.3
2.5
5.0
5.9
3.1
3.6
4.1
4.7
4.9
6.0
9.0
Residual
2.7
3.2
3.8
4.0
4.9
4.2
3.2
3.5
4.0
4.1
4.2
4.0
5.0
Other
0.2
0.3
0.0
0.3
0.5
0.3
0.2
0.3
0.3
0.3
0.3
0.0
1.0
Bunkers
1.4
1.3
1.1
1.2
1.3
1.5
1.5
1.6
2.0
1.8
1.9
2.0
2.0
Losses
Total
a Estimated.
b Projected.
Gabon
Sectoral Oil Demand, by Fuel Type and Year
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According to United Nations statistics, domestic oil
consumption in Gabon peaked at 15,000 b/d in 1977,
falling by a third thereafter as the country was forced
in 1978-79 to undergo a period of economic austerity
by the International Monetary Fund. Oil demand is
only now regaining 1977 levels, with growth centered
on the transportation sector, which historically has
accounted for about half of domestic oil demand since
1973. We expect this trend to continue as use of diesel
fuel increases in Gabon's expanding railway system.
Increased availability of hydroelectricity should keep
demand for other products at relatively low rates of
growth for the remainder of the decade.
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Indonesia
Domestic Oil Consumption, by Fuel Type
32.9
36.8
41.3 44.0
49.9
56.0
60.4
65.3
71.6
73.0
75.0
85.0
120.0
68.1
81.2
83.9 92.1
107.1
121.2
132.1
142.7
154.1
158.7
165.0
195.0
310.0
41.1
50.7
61.5 74.0
89.9
104.9
114.4
130.3
147.8
152.1
157.0
185.0
295.0
18.0
18.7
18.7 19.4
21.9
25.9
32.6
40.5
46.5
48.2
51.0
60.0
100.0
Other
2.3
2.5
4.6 4.7
2.7
20.0
9.2
8.0
8.0
8.4
9.0
10.0
15.0
Bunkers
7.7
6.3
7.7 8.2
10.3
10.1
10.4
10.3
10.5
9.0
9.0
10.0
10.0
Losses
12.0
17.5
6.5 6.6
15.1
7.9
8.0
8.0
9.1
9.0
9.0
15.0
20.0
182.1
213.7
224.2 249.0
296.9
346.0
367.1
405.1
447.6
458.4
475.0
560.0
870.0
a Estimated.
b Projected.
Indonesia
Sectoral Oil Demand, by Fuel Type and Year
Transport
Electric
Industrial
Residential
Total
85
15
65
35
0
0
200
0
0
20
15
0
0
35
0
40
100
20
10
15
185
0
140
0
0
0
0
140
85
195
185
70
10
15
560
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We project Indonesia will consume about 870,000 b/d
of oil by 1990, 80 percent above current levels. Recent
slow growth in oil consumption due to increases in
domestic oil prices and the generally sluggish econo-
my are unlikely to last after 1984, when pent-up
demand from a growing population and increasing
economic activity should push oil consumption growth
rates back toward 10 percent annually. If Jakarta
plans to maintain a sizable oil export capability into
the 1990s, substantial hikes in domestic oil prices
could be necessary
Transportation Sector
According to Indonesian statistics, the transportation
sector currently accounts for over one-third of total oil
consumption. Domestic price increases for gasoline in
early 1982 appear to have dropped growth in demand
to less than 4 percent over the past year, and another
round of price increases this year should continue to
keep consumption growth low through 1984. Strong
popular demand for motor transport, however, will
continue the shift to private motor vehicles and public
transportation. In a nation of approximately 13,000
islands, interisland air and sea movements will con-
sume increasing amounts of oil products, and we
expect demand in this area to more than double, from
30,000 b/d in 1980 to 70,000 b/d by 1990.
Industrial Sector
Our projections show industrial-sector oil consump-
tion to grow from the current 160,000 to 165,000 b/d
to almost 300,000 b/d by 1990. Government subsi-
dies, which kept kerosene prices low for household
use, resulted in widespread industrial substitution of
kerosene for other fuel oils, and the sector could be
consuming over 60,000 b/d of kerosene by 1990.
Nonenergy use of oil products-asphalts and lubri-
cants-will increase only slightly, particularly as nat-
ural gas is substituted for oil as an industrial feed-
stock in the petrochemical industry.
Residential Sector
Residential consumption of oil is also expected to
remain at about one-fourth of total oil demand
throughout the decade. Growth in household use of
kerosene-which Indonesian statistics show ran at
around 11 percent annually from 1973 to 1980-
slumped sharply to about 3 percent last year due to
price increases that raised the cost of domestic kero-
sene from 23 to 54 cents per gallon. We expect
residential demand for kerosene to accelerate in the
last half of the decade, as delays in construction of
additional electric capacity force households shifting
from noncommercial energy sources, such as wood, to
use kerosene.
Electric Power Sector
Although most of Indonesia's installed electric gener-
ating capacity is fueled by oil, the total consumed is
only about 30,000 b/d. Probable delays in Indonesian
plans to construct coal and hydroelectric power plants
will keep the use of oil-fired thermal plants high. As a
result, we project oil consumption in the sector to
increase to about 50,000 b/d between now and 1990.
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Iran
Domestic Oil Consumption, by Fuel Type
1973
1974
1975
1976 1977
1978
1979
1980,
1981a
1982a
1983b
1985b
1990b
Gasoline
33.2
40.2
54.0
63.7 81.0
92.0
92.0
100.0
69.5
75.0
83.0
100.0
130.0
Kerosene
66.9
77.7
78.5
106.9 123.6
124.1
128.0
130.0
120.4
130.0
143.0
160.0
205.0
Distillate
77.9
87.3
105.9
124.0 149.6
136.0
151.0
165.0
152.8
165.0
170.0
190.0
260.0
Residual
69.1
76.3
88.6
99.2 107.4
126.0
102.0
105.0
97.2
105.0
115.0
125.0
160.0
Other
11.9
14.1
17.1
16.5 26.1
21.6
21.0
21.0
23.2
25.0
26.0
30.0
40.0
Bunkers
128.3
116.5
98.0
75.0 70.0
61.0
46.9
30.0
5.0
10.0
15.0
25.0
35.0
37.9
35.1
29.9
46.0 31.5
30.0
25.9
35.0
20.0
20.0
20.0
20.0
30.0
425.2
447.2
472.0
531.3 589.2
590.7
566.8
586.0
488.1
530.0
572.0
650.0
860.0
a Estimated.
b Projected.
Iran
Sectoral Oil Demand, by Fuel Type and Year
Gasoline
Kerosene Dis
tillate
Residual
Other
Losses
Total
Transport
100
12 45
30
2
0
189
Electric
0
0 110
101
0
0
211
Industrial
0
0 0
4
19
35
58
Residential
0
118 10
0
0
0
128
Total
100
130 165
135
21
35
586
Transport
100
15 60
25
0
0
200
Electric
0
0 115
115
0
0
230
Industrial
0
0 0
10
30
20
60
Residential
0
145 15
0
0
0
160
Transport
130
25 75
35
5
0
270
Electric
0
0 160
140
0
0
300
Industrial
0
0 5
20
35
30
90
Residential
0
180 20
0
0
0
200
Total
130
205 260
195
40
30
860
Confidential
20
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Given the uncertain political and economic situation,
forecasting energy consumption for Iran is the most
difficult analysis of all the OPEC countries. Available
economic data indicate output in the nonoil sectors of
the economy has declined by about 50 percent since
1979, compared with prerevolution average annual
growth of 8 percent. Before the war with Iraq, normal
demand for refined products in Iran was about
570,000 b/d, although peak seasonal demand for
kerosene and diesel products pushed consumption in
some winter months to almost 700,000 b/d. War
damage in 1980-81 shut down Abadan, Iran's largest
refinery, limiting domestic petroleum supplies and
forcing oil consumption to levels of the mid-1970s. Oil
use this year is once again approaching consumption
levels immediately preceding the war.
Assuming that Iran enjoys a stable political climate
and the government proceeds with a policy of re-
strained economic growth at an annual average of
about 5 percent as the recently announced five-year
plan indicates, we expect that oil consumption could
increase to as much as 860,000 b/d by 1990.
Transportation Sector
Official Iranian statistics show that gasoline con-
sumption increased an average of 17 percent annually
between 1973 and 1980 as the number of automobiles
roughly quadrupled. Motor-diesel use nearly tripled
over the same period as the heavy vehicle fleet
expanded rapidly; in 1980 Iran had some 200,000
trucks and 48,000 buses. With only about 4,600 km of
track in the country, however, rail transport is only a
minor consumer of diesel fuel.
Demand for gasoline and motor-diesel fuel in 1980
was estimated from trade press reporting at around
100,000 b/d and 45,000 b/d, respectively. During the
war with Iraq, however, gasoline has been rationed
because of damage to refineries. Because the war has
virtually closed Iran's major port, Bandar Khomeini,
and military and commercial trucks must now haul
imports by land from Iran's southern ports, motor
transport demand for diesel fuel has probably in-
creased from 1980 levels
Given constraints by the revolutionary government on
the importation of private vehicles, the slower eco-
nomic expansion, and higher fuel prices, growth rates
for oil consumption in the transport sector should be
considerably less than those of the late 1970s-
probably below 5 percent through 1990. An end to the
Iran-Iraq war should allow Tehran to reopen its
northern Persian Gulf ports, which should ease the
growth in demand for diesel fuel by the trucking
industry.
Bunker consumption has fallen steadily from a peak
of 128,000 b/d in 1973, reflecting the decline in
Iranian oil exports and, to a lesser extent, relatively
high Iranian fuel prices. Currently, bunker demand is
on the order of 15,000 b/d and should rise to about 25X1
25,000 b/d by 1985, assuming relatively stable oil
exports over the next several years. Commercial air
traffic to and from Iran also has fallen considerably
since the revolution, with military flights now ac-
counting for most aviation kerosene consumption. We
project long-term growth to average about 7 percent
annually through 1990, when aviation kerosene de-
mand will be about 25,000 b/d.
25X1
25X1
Electric Power Sector
Iranian statistics show electric utilities to be the
largest consumer of refined products in Iran, current-
ly accounting for more than one-third of the country's
total oil consumption. Within the electric power
sector, liquid-fuel plants account for 70 percent of
generating capacity; natural gas, one-fifth; and hydro-
electric plants, 10 percent. Oil consumption by power
plants apparently has fallen only slightly since the 25X1
revolution; rising demand for electricity in the resi-
dential area has offset economic disruption in the
industrial sector. The closing of associated gasfields
following the outbreak of the Iran-Iraq war also has
required additional liquid fuels for those electric
power plants previously fed by gas.
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Before the revolution, Iran had been planning to
double electric capacity by 1982 from the 1978 level
of 8,000 megawatts (MW) and triple it by 1987. Most
of the expansion was planned in hydroelectricity,
nuclear power, and gas-fueled thermal power plants:
? Tehran has since abandoned plans for near-term
development of a nuclear industry, although recent
meetings between Iranian officials and West
European nuclear firms indicate that some work
previously started on nuclear power plants may
eventually be completed.
? Expansion of hydroelectric facilities has also fallen
behind; the Muhammand Reza Shah Dam was
commissioned at only one-half its planned capacity
of 750 MW.
? Lack of maintenance has caused general deteriora-
tion at a number of power plants and in smaller
generators.
? Based on its new five-year plan, Tehran hopes to
install several new power plants-totaling 8,000
MW in capacity-most of which are planned to be
gas fired.
Despite continued government interest in utilizing gas
for electricity generation, the current natural gas
supply and distribution system probably will not be
able to keep up with the requirements of a rapidly
growing electric sector. As a esult, we project oil
consumption to increase to about 300,000 b/d by
1990. In the future, excess residual fuel oil available
as the result of refinery upgrading will make in-
creased use of heavy fuels in the electric power sector
more attractive. Strong demand for electricity and the
leadtimes required for construction of large thermal
plants, however, mean modular, gas-turbine genera-
tion will continue to be used as a stopgap, keeping
consumption of distillate fuels high over most of the
decade. In addition, diesel fuels will power generators
in rural electrification and agricultural development
programs and for some peak load requirements.
Residential Sector
Space heaters in the residential and commercial sec-
tors consumed an estimated 120,000 b/d of kerosene
in 1980. Despite plans by Tehran to expand the
national gas grid into residential areas of major cities,
we believe population pressures will outpace the avail-
ability of alternative energy supplies. Although
growth rates will slow, home kerosene consumption
will still grow by 50 percent over the course of the
decade, and we project it to reach 180,000 b/d by
1990. Use of distillate fuels in residential heating-
currently as high as 30,000 b/d in peak winter
months-should double by the end of the decade to an
annual rate of about 20,000 b/d.
Industrial Sector
We estimate that refinery losses in the oil industry
have dropped to about 20,000 b/d, down from an
average of 35,000 b/d before the war. The primary
cause was the shutdown of the giant refinery at
Abadan, which accounted for over half the country's
prewar refining capacity. Outside the petroleum sec-
tor, industrial use of oil in 1980 was probably less
than 10,000 b/d. While development plans call for
natural gas to fuel industrial expansion in the latter
part of the decade, delays are likely to postpone the
substitution of gas for oil, and we project industrial oil
demand to rise to about 90,000 b/d by 1990.
25X1
25X1
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Official statistics and our recent estimates show war-
related disruptions in the transportation sector, along
with damage to several oil-fired electric plants, have
reduced the annual growth of oil demand in Iraq since
1980 to about 6 percent, less than half the rate of the
1970s. Once the war with Iran is over, we expect
expansion of the transportation sector to account for
about one-half the total growth in oil consumption by
1990. Gas is currently the primary fuel for the electric
power sector, although about 100,000 b/d of oil are
also burned in power plants. Baghdad intends to
convert as many plants as possible to gas, and by 1985
demand for liquid fuels in the sector should begin to
level off. Unless continuing hostilities with Iran keep
economic growth low or the substitution of gas for oil
is delayed, we project Iraqi domestic oil consumption
to grow by about 4 to 5 percent annually through the
latter part of the decade, reaching 330,000 b/d by
1990.
Transportation Sector
According to OPEC statistics, oil consumption in the
transportation sector grew about 14 percent annually
between 1973 and 1980, spurred by Baghdad's easing
of constraints on automobile imports in 1977. Imports
of vehicles averaged about 50,000 units annually
through 1980, pushing the total registered vehicle
fleet then to around 420,000 vehicles. In the 1980s we
project growth in the transportation sector to fall to
about half the 1973-80 rate, slowed by the war, lack
of foreign exchange for vehicle imports, and increas-
ing engine efficiency. Following an end to hostilities
with Iran, increases in air and commercial sea travel
could raise total consumption of jet fuel and bunkers
to about 20,000 b/d by 1990. By the end of the
decade, we expect oil consumption within the trans-
portation sector to be about 125,000 b/d, double 1980
levels.
Electric Power Sector
Gas is the primary energy source for Iraq's electric
power sector, fueling over half the country's generat-
ing capacity. About one-fourth of the capacity is still
oil fired, however, and utilities accounted for about
95,000 b/d of petroleum products in 1980, 45 percent
of total Iraqi oil consumption. If plans to increase gas
use in the electric power sector are met, demand for
liquid fuels should begin to level off after 1985.
Industrial Sector 25X1
We expect that oil industry use of about 14,000 b/d in
1980 will double by 1990 if current refinery expansion
plans are carried out. Oil consumption in other indus-
tries-primarily naptha used as a petrochemical feed-
stock-should grow to about 45,000 b/d by 1990,
roughly twice current demand levels
Residential Sector
Iraqi officials indicate that liquefied petroleum gas
(LPG) and electricity are increasingly displacing kero-
sene in the residential sector. As a result, we project
residential kerosene consumption to stabilize at about
15,000 b/d through the remainder of the decade.
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Iraq
Domestic Oil Consumption, by Fuel Type
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982,
1983b
1985b
1990b
Gasoline
11.3
11.7
14.5
17.4
19.2
22.2
26.7
28.7
30.7
32.9
35.0
40.0
55.0
Kerosene
16.1
19.4
21.3
23.0
23.8
25.0
25.8
27.7
29.7
31.9
34.0
35.0
35.0
Distillate
14.3
15.7
22.1
29.0
34.9
38.9
45.6
48.8
52.2
55.8
60.0
65.0
90.0
Residual
32.2
34.3
34.6
39.3
44.8
52.6
58.2
65.0
69.5
73.8
79.0
90.0
95.0
Other
3.5
3.9
5.5
6.7
8.0
10.8
14.9
21.0
22.5
24.1
24.0
25.0
25.0
Bunkers
0.0
0.0
0.0
0.0
0.0
2.3
2.0
2.0,
0.0
0.0
0.0
0.0
5.0
Losses
3.0
5.5
5.6
5.8
7.1
10.6
12.0
14.0
7.0
10.0
14.0
20.0
25.0
Total
80.4
90.5
103.6
121.2
137.8
162.4
185.2
207.2
211.6
228.5
246.0
275.0
330.0
Estimated.
b Projected.
Iraq
Sectoral Oil Demand, by Fuel Type and Year
Gasoline
Kerosene
Distillate
Residual
Other
Losses
Total
5
21
14
40
Residential
0
10
0
0
0
0
10
Total
29
27
49
5
0
0
90
Electric
0
10
30
75
0
0
115
Industrial
0
0
0
10
25
20
55
Residential
0
15
0
0
0
0
15
90
25
125
115
15
330
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uonnaenaal
Kuwait's domestic oil consumption is currently nearly
160,000 b/d, but an estimated 45,000 b/d of this
represents additional demand for oil due to the trans-
shipment of supplies to Iraq by truck and use in the
generation of electric power because of natural gas
shortages. Assuming a settlement of the Iran-Iraq war
and increased gas availability, we project that domes-
tic oil consumption could actually decline to about
155,000 b/d by 1985. By 1990, however, consumption
is expected to be about 185,000 b/d.
Transportation Sector
We estimated that the consumption of motor-diesel
fuel has increased by 20,000 b/d since 1980, in large
measure because Kuwait has become a major trans-
shipment center for the movement of supplies to
southern Iraq. If a settlement is reached between Iran
and Iraq that allows Baghdad some use of its southern
ports, we would expect motor-diesel use in Kuwait to
fall to about 25,000 b/d by 1985. Due to a dramatic
falloff in oil exports, a drop in demand for bunkers-
currently estimated at about 15,000 b/d-has re-
duced the transportation sector's share of domestic oil
consumption to about 45 percent this year from its 65-
percent share in 1980. If oil output stabilizes at
around 1.5 million b/d in the late 1980s, we estimate
bunker consumption will rise to about 35,000 b/d. F-
Electric Power Sector
Current low levels of Kuwaiti crude oil production
have restricted associated natural gas supplies for the
electric power industry. If crude production increases
above 1.25 million b/d by 1985, oil consumption in
the electric power sector should drop to about 25,000
b/d. Kuwait is drilling for nonassociated gas to boost
supplies, but to date has had little success. Without
nonassociated gas, we project oil consumption by
electric power plants will remain at about the 25,000-
b/d level through 1990, with residual fuel oil gradual-
ly replacing distillate in smaller, isolated generating
stations.
Industrial Sector
Petrochemical manufacturing and oil production and
processing account for about 25,000 b/d of oil con-
sumption. We estimate that expansion of refineries
and rising crude oil throughput will increase overall
industry use to about 40,000 b/d during the last half
of the decade. Most of the smaller industries included
in Kuwait's development plan are to use natural gas
for power and feedstock.
Consumption of kerosene, used for home cooking and
lighting, is currently estimated at 3,000 to 4,000 b/d.
As Kuwait continues to urbanize, LPG and electric
power will increasingly displace kerosene, making oil
use in the residential sector almost negligible by 1990.
25X1
25X1
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Kuwait
Domestic Oil Consumption, by Fuel Type
Kerosene
3.0
4.0
4.8 5
.9
6.1
7.2
8.9
7.9
8.7
9.5
9.0
10.0
10.0
Distillate
3.2
3.5
4.1 5
.2
6.2
9.0
8.1
10.0
20.2
29.8
35.0
___
30.0
35.0
Residual
0.8
0.9
1.9 4
.4
2.4
0.7
1.6
0.0
0.0
0.0
0.0
0.0
5.0
Other
1.1
1.3
2.6 2
.6
2.6
3.2
4.0
15.4 c
33.0
46.5
55.0
35.0
30.0
Losses
8.1
7.3
28.0 27
.1
21.5
28.0
28.0
20.0
17.0
25.0
30.0
30.0
30.0
Total
115.1
89.8
93.8 102
.0
102.7
110.1
125.3
109.6
127.1
152.9
169.0
155.0
185.0
a Estimated.
b Projected.
c From 1980 includes crude oil to Doha Power Station.
Kuwait
Sectoral Oil Demand, by Fuel Type and Year
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Based on 1981 Libyan data, we estimate that petro-
leum product consumption in Libya is currently close
to 120,000 b/d, having increased at an average
annual rate of 14 percent since 1973. OPEC statistics
show the rate of growth in oil demand in recent years
has dropped in half, however, and even assuming
some improvement, petroleum consumption is unlike-
ly to grow at above 6 to 7 percent annually through
the remainder of the 1980s. Increased use of natural
gas in electric power and industrial plants should keep
oil consumption increases relatively low, although
demand will still grow to about 180,000 b/d by 1990.
Transportation Sector
The transportation sector has registered the largest
increase in fuel consumption. Gasoline use, although
slowing in recent years, increased at an annual rate of
14 percent between 1973 and 1982. We estimate
current gasoline consumption to be around 24,000
b/d. Diesel fuel use by commercial trucks and mili-
tary vehicles accounts for a small, but growing, share
of the transport sector. Nationalization of the private
trucking industry, however, and promulgation of re-
strictive real estate laws dampening construction ac-
tivity have been instrumental in slowing the growth in
demand for motor-diesel fuel in recent years. Our
estimates place jet fuel consumption at no more than
5,000 b/d, with most going to the military. Bunker
fuel consumption by oil tankers and other commercial
shipping is minimal.
Electric Power Sector
The electric power sector is the largest consumer of
petroleum products, currently accounting for 50,000
to 55,000 b/d. Tripoli has announced plans to raise its
generating capacity to over 3,500 MW by 1990.
Residual fuel oils are to be substituted for diesel oil,
which currently accounts for around 60 percent of the
liquid fuel used in this sector. Natural gas is also
becoming more important in power generation, and
we estimate it will supply up to one-third of the
energy requirements in the sector by 1990.
Industrial Sector
The petroleum industry currently accounts for about
half of the 12,000 b/d in industrial oil demand, with
the remainder going into petrochemical and asphalt
production. We expect refinery losses to grow to
10,000 b/d as a new refinery at Ras Lanuf is
completed in the mid-1980s and throughput at the
Zawia refinery increases. Oil consumption in the
remainder of the industrial sector will slow as plants
convert to natural gas.
Residential Sector
OPEC statistics show residential kerosene consump-
tion has remained stable at about 5,000 to 6,000 b/d
since 1975. Used primarily for lighting and cooking, it
is being displaced by bottled gas and electricity, and
demand is likely to remain flat through the remainder
of the decade.
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Libya
Domestic Oil Consumption, by Fuel Type
1973
1974
1975 1976
1977
1978
1979
1980
1981
1982a
1983b
1985b
1990b
Gasoline
7.1
8.7
10.5 11.8
13.4
15.6
17.4
19.0
20.6
22.3
24.0
25.0
35.0
Kerosene
4.3
4.7
5.8 6.1
6.0
6.3
8.3
9.9
9.6
10.3
11.0
10.0
15.0
Distillate
11.5
15.6
21.2 22.9
24.4
26.5
30.0
31.6
35.2
38.0
41.0
45.0
50.0
Residual
3.2
3.9
7.8 8.8
12.0
14.5
17.6
21.5
22.9
25.6
28.0
35.0
55.0
Other
5.6
3.4
4.9 3.7
6.2
5.8
7.0
3.4
5.4
5.5
6.0
5.0
10.0
Bunkers
1.0
1.0
1.0 1.0
1.0
1.1
2.0
3.0
2.5
2.0
2.0
5.0
5.0
0.1
0.1
0.2 1.9
3.6
4.5
5.0
5.0
5.0
6.0
6.0
10.0
10.0
32.8
37.4
51.4 56.2
66.6
74.3
87.3
93.4
101.2
109.7
118.0
135.0
180.0
a Estimated.
b Projected.
Libya
Sectoral Oil Demand, by Fuel Type and Year
Gasoline
Kerosene
Distillate
Residual
Other
Losses
Total
Transport
19
4
7
3
0
0
33
Electric
0
0
25
17
0
0
42
Industrial
0
0
0
4
3
5
12
Residential
0
6
0
0
0
0
6
Transport
25
5
10
5
0
0
45
Industrial
0
0
0
5
5
10
20
Residential
0
5
0
0
0
0
5
Transport
35
10
15
5
0
0
65
Electric
0
0
35
45
0
0
80
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We project growth in Nigerian oil consumption will
slow considerably from last decade's annual rate of
almost 20 percent, primarily because of slower growth
in demand in the transportation sector, which current-
ly accounts for over one-half of total oil consumption
of 215,000 b/d. Limited road and rail capacity, port
constraints, and rising domestic fuel prices should
hold annual growth rates in the sector to under 7
percent through 1990. Hydroelectric plants will con-
tinue to provide more than two-thirds of the total
electricity generated, and kerosene and electricity are
only gradually replacing noncommercial fuels in the
residential sector.
Transportation Sector
From official Nigerian statistics and OPEC data, we
estimate that transportation demand accounts for
about 55 percent of current oil consumption. Growth
in gasoline use should average 5 percent through 1985
and then slow gradually as increasing fuel prices and
limited road capacity hold down increases in traffic
mileage. While the conversion of Nigeria's railroads
to diesel engines accounted for a major part in
increasing distillate fuel consumption between 1973
and 1980, future rail expansion will probably be
modest. Indeed, an inadequate transportation system
may be a significant impediment to Nigeria's econom-
ic growth over the decade and affect oil consumption
in other sectors as well.
Electric Power Sector
We estimate that electricity generation accounts for
less than 20 percent of total petroleum product con-
sumption and may drop to only 15 percent by 1990.
Hydroelectric generating plants currently provide
about two-thirds of total electricity production in
Nigeria, and several new hydroelectric plants are
planned to come on stream before 1990. Periodic,
severe droughts make heavy dependence on hydro-
power risky, however, and we believe Lagos will
maintain a sizable thermal power plant capacity for
the foreseeable future. Although government develop-
ment plans call for replacing oil with gas, or possibly
coal, oil-fired generation is likely to account for at
least 25 percent of generating capacity in 1990.
Nigeria's large, albeit low-quality, coal reserves have
been neglected in recent years, and current coal
production is inadequate to meet domestic demand.
Previous press reporting indicates that Lagos has at
least considered constructing several coal-fired gener-
ating plants to supply power to the national electricity
grid, but we believe such projects are unlikely to be
undertaken in coming years because of limited coal
production and transportation constraints.
Residential Sector
Residential demand for oil products, primarily kero-
sene, currently accounts for 16 percent of total oil
product consumption-30,000 b/d-and is likely to
grow to about 45,000 b/d by 1990. Firewood and
charcoal, the primary residential energy sources for
70 percent of the Nigerian population, are only
gradually being replaced by kerosene and electricity
as wood becomes scarce and charcoal more expensive.
Industrial Sector
Industrial demand accounts for only 12 percent of
total consumption. Although we expect industrial oil
demand to double to about 40,000 b/d between 1980
and 1990, industry's share of total domestic consump-
tion will remain fairly constant as natural gas be-
comes a major energy source for the industrial and
petrochemical sectors. Nigeria plans to utilize part of
its vast gas potential in fertilizer plants, petrochemical
projects, and several new steel mills under construc-
tion.
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Nigeria
Domestic Oil Consumption, by Fuel Type
Gasoline
16.7
20.6
27.5 38.4
43.5
48.0
56.9
69.8
86.1
90.4
95.0
105.
1140.0
Kerosene
7.8
8.7
13.1 14.9
17.2
18.1
21.5
34.2
36.0
37.0
39.0
45.0
55.0
Distillate
12.1
13.0
14.8 19.7
28.6
31.9
33.6
40.7
46.0
47.0
49.0
55.0
70.0
Residual
7.4
7.4
8.1 11.4
9.7
11.8
12.0
14.7
16.2
16.8
17.0
20.0
25.0
Other
4.9
4.4
4.6 5.0
12.9
24.2
30.3
11.6
12.4
12.9
13.0
15.0
20.0
Bunkers
0.0
0.0
0.0 0.0
0.0
0.0
0.0
0.0
0.4
0.9
1.0
0.0
0.0
Losses
2.6
2.2
0.7 1.3
1.4
1.8
2.0
2.6
3.0
3.1
3.0
5.0
5.0
51.5
56.3
68.8 90.7
113.3
135.8
156.3
173.6
200.1
208.1
217.0
245.0
315.0
a Estimated.
b Projected.
Nigeria
Sectoral Oil Demand, by Fuel Type and Year
Electric
0
0
20
10
0
0
30
Industrial
0
0
0
5
11
3
19
Residential
0
29
0
0
0
0
29
Total
70
34
41
15
11
3
174
Transport
105
5
25
0
0
0
135
Electric
0
0
25
15
0
0
40
Industrial
0
0
5
5
15
5
30
Residential
0
40
0
0
0
0
40
Total
105
45
55
20
15
5
245
Industrial
0
5
20
5
40
Residential
0
0
0
0
45
Total
140
25
20
5
315
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Approximately two-thirds of domestic oil consump-
tion in Qatar is accounted for by the transportation
sector, and we project it to remain above 60 percent
through 1990, when total oil demand in Qatar will
exceed 20,000 b/d. Most of the energy needs in other
sectors of the economy are already met by natural
gas, with the exception of the residential sector, which
uses mostly bottled gas and electricity. We estimate
that the only significant growth in oil use outside the
transportation sector will be in the petroleum indus-
try, due primarily to refinery losses at the 50,000-b/d
Um Said export refinery to be completed this year.
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Qatar
Domestic Oil Consumption, by Fuel Type
Gasoline
1.3
1.4
1.6
2.0
2.6
2.9
3.4
3.9
4.4
5.1
5.0
6.0
7.0
Kerosene
0.6
0.8
1.2
1.6
1.6
1.7
1.6
1.6
1.5
1.5
2.0
3.0
4.0
Distillate
0.8
1.0
1.4
2.1
2.8
2.8
3.0
3.2
3.7
4.1
4.0
5.0
6.0
Residual
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Other
0.0
0.0
0.0
0.0
0.1
0.2
0.3
0.3
0:4
0.5
0.5
0.0
1.0
Bunkers
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.3
0.2
0.0
0.0
1.0
a Estimated.
b Projected.
Qatar
Sectoral Oil Demand, by Fuel Type and Year
0 2
0
0
0
6
0 1
0
0
0
1
Industrial
0
0 0
0
0
0
0
Residential
0
2 0
0
0
0
2
1 3
0
0
0
10
0 2
0
0
0
2
Industrial
0
0 0
0
0
2
2
Residential
0
2 0
0
0
0
2
Transport
7
2 4
1
0
0
14
Electric
0
0 2
0
0
0
2
Industrial
0
0 0
0
1
3
4
Residential
0
2 0
0
0
0
2
Total
7
4 6
1
1
3
22
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We estimate that Saudi domestic oil consumption,
excluding bunkers, doubled between 1977 and 1980.
Growth should slow considerably in the years ahead
as a continuing weak oil market affects overall eco-
nomic activity within the country. We project total oil
consumption to increase from an estimated 775,000
b/d in 1982 to 1.1 million b/d by 1990, an annual
growth rate of less than 5 percent, almost half that of
the 1973-82 period.
Official Saudi statistics show that the most dramatic
consumption increases have come in the use of middle
distillate and residual fuel oils to power electric and
saltwater desalination plants. Consumption more than
doubled to about 430,000 b/d between 1979 and
1982. Demand could grow by another 60,000 b/d this
year, as natural gas shortages increasingly force
consumers to switch back to liquid fuels. Expected low
oil production levels will keep associated gas volumes
low until at least late next year, when additional gas
supplies are developed.
We foresee the real possibility of domestic oil price
hikes in the near future, which should moderate
demand for most petroleum products, particularly for
gasoline. A generally sluggish economy should also
slow growth in the vehicle fleet and reduce burgeon-
ing demand for oil in the construction industry. We
expect demand for marine bunkers, which has de-
clined significantly since 1974, to bottom out this year
at about 55,000 b/d and climb back to about 110,000
b/d by 1990.
Transportation Sector
We project gasoline consumption, which rose at an
annual rate of 25 percent from 1973 through 1982, to
drop to about one-fourth this rate for the remainder of
the decade. Lower growth in the economy and in per
capita income will slow motor vehicle imports into
Saudi Arabia, and increased auto efficiency should
offset rising vehicle mileage, contributing to slower
growth in domestic gasoline demand. Demand for
diesel fuel should grow at approximately the same
rate as gasoline in coming years, rising from 42,000
b/d in 1980 to about 80,000 b/d by 1990.
Countering the trend of other fuels, we foresee the
rate of aviation kerosene consumption increasing
roughly 9 percent annually through 1990. The con-
struction of a network of regional airports, along with
large international complexes at Jidda and Riyadh,
will keep the growth rate of domestic air traffic high
throughout the decade
Saudi statistics show that consumption of marine
bunkers has dropped dramatically in the past two
years. The threefold increase in bunker prices in
1979-80 forced shippers to use larger and more
efficient tankers and slower steaming to conserve fuel.
Inclusion of mandatory bunker purchases in crude oil
contracts by other Persian Gulf producers-notably
Iran and Kuwait-also contributed to lower Saudi
bunker use. In the late 1970s almost one-fourth of
Saudi bunker sales were to ships lifting crude at ports
outside of Saudi Arabia. Bunker demand will be
unusually low this year because of reduced levels of
Saudi oil exports but should rebound to about 70,000
b/d over the next few years and grow to about
110,000 b/d by 1990.
Electric Power Sector
Since 1976 electric power consumption has increased
at an average annual rate of over 30 percent as
electric grids were extended to large sections of the
country. Official statistics show about four-fifths of
the population are now included in the electrification
program, and, with most of the planned 10,000 MW
of generating capacity installed, the large jumps in
electricity demand seen in recent years are probably
over. Natural gas is to fuel most power plants in the
eastern region, where the majority of the country's
generating capacity is located. Because of low levels
of crude oil production expected to last through 1985,
associated gas will be in short supply and liquid
fuels-predominately distillates-are to be substitut-
ed until additional gas resources become available late
next year. This will cause a sharp rise in oil demand in
the electric power sector between now and 1985, but
oil consumption in the sector, excluding that used for
desalination, should level off at about 250,000 to
25X1
25X1
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Saudi Arabia
Domestic Oil Consumption, by Fuel Type
Gasoline
16.3
19.9
26.6
35.3
45.6
57.7
66.5
87.1
102.4
120.4
131.0
155.0
190.0
Kerosene
9.9
13.2
16.1
19.1
24.5
26.9
30.8
33.0
37.0
40.4
44.0
50.0
70.0
Distillate
26.3
18.5
19.0
31.1
49.4
87.5
98.7
97.6
156.2
193.7
250.0
270.0
330.0
Residual
8.7
22.7
36.1
45.2
47.5
67.3
88.9
162.3
201.6
236.6
239.0
240.0
295.0
Other c
7.0
13.5
19.5
26.4
34.9
40.8
43.0
77.5
62.3
71.0
79.0
95.0
70.0
Bunkers
251.9
255.4
149.5
172.2
174.8
131.1
126.0
101.2
69.0
69.8
56.0
75.0
110.0
Losses
15.5
19.2
18.8
24.9
25.0
28.0
30.0
35.0
39.5
43.0
45.0
50.0
60.0
Total
335.6
362.4
285.6
354.2
401.7
439.3
483.9
593.7
668.0
774.9
844.0
935.0
1,125.0
a Estimated.
b Projected.
Includes crude oil.
Saudi Arabia
Sectoral Oil Demand, by Fuel Type and Year
Gasoline
Kerosene Distillate
Residual
Other
Losses
Total
Electric
0
0 48
113
51
2212
Desalination
0
0 0
71
0
0
71
Residential
0
5 0
0
0
0
5
Desalination
0
0 40
115
25
0
180
Industrial
0
0 20
45
30
50
145
Residential
0
5 0
0
0
0
5
Desalination
0
0 70
190
0
0
260
Industrial
0
0 30
30
40
60
160
Residential
0
5 0
0
0
0
5
Total
190
70 330
405
70
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260,000 b/d after that as gas supplies expand. By
1990 liquid fuels, including some raw crude oil, will
essentially be used only in the western provinces and
at smaller, remote locations within the kingdomF_
Desalination Sector
Unlike a number of the smaller Persian Gulf coun-
tries in which water desalination is a component of the
electric power sector, Saudi Arabia's desalination
plants are major independent consumers of liquid
hydrocarbons. We expect the desalination facilities to
increase their use of oil from 70,000 b/d in 1980 to at
least 260,000 b/d by 1990. Currently, six major
plants are under construction in the western prov-
inces, which will enlarge water production capacity by
6 million b/d; another 20 plants are planned, which
could double this rate by 1990. Almost all of these
plants will be oil fired.
Desalination plants in the eastern provinces are to be
fueled by natural gas, with backup systems capable of
burning both distillate and heavy fuel oil. Because of
the current gas shortfall, liquid fuels-primarily
distillates-are being substituted, and we project oil
consumption in the desalination sector to rise at an
annual rate close to 20 percent between 1980 and
1985. Growth should then fall off to less than 10
percent in the latter half of the decade, reflecting
completion of most large plants and increasing avail-
ability of natural gas for desalination plants on the
Persian Gulf.
Residential/Commercial Sector
Electricity and bottled gas (LPG) are displacing kero-
sene in the residential and commercial sectors for
space heating and cooking. Although LPG consump-
tion, currently around 6,000 b/d, is constrained by
distribution facilities, we expect it to double by 1985
and triple by 1990. Residential kerosene demand
peaked in 1976 and is likely to remain around 5,000
b/d
Industrial Sector
Our analysis indicates that total industrial use of oil
products in 1980 was about 115,000 b/d and will
increase to 160,000 b/d by 1990. The petroleum
sector consumed about 60,000 b/d in 1980, over half
of which were accounted for by losses in the refinery
process. Current industrial demand for oil is probably
close to the 1980 figure of 115,000 b/d. Lower levels
of oil production have reduced the petroleum indus-
try's share, offseting growth in other areas of the
industrial sector, although increasing substitution of
liquid fuels for natural gas in the short term will push
oil consumption in industry up to about 145,000 b/d
by 1985. After that gas should once again replace oil
in the eastern industrial areas. Saudi plans to double
refinery capacity will increase the petroleum indus-
try's consumption to 80,000 b/d by 1990, while
demand in the construction sector will level off at
about 35,000 to 40,000 b/d between now and 1990.
Nonenergy use of oil products, such as asphalt,
lubricants, and petrochemicals, is currently about
25,000 b/d and is expected to increase to about
40,000 b/d.
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United Arab Emirates
Domestic Oil Consumption, by Fuel Type
Gasoline
1.4
1.9
5.2
6.0
8.7
10.2
9.2
13.6
17.9
18.3
20.0
25.0
35.0
Kerosene
0.7
1.3
4.3
5.0
7.0
7.3
8.0
11.5
16.2
16.2
17.0
20.0
20.0
Distillate
2.5
3.3
15.1
18.7
28.4
31.9
30.0
31.6
41.5
42.5
46.0
50.0
60.0
Residual
0.1
0.1
0.1
1.0
3.0
3.6
7.0
19.2
20.9
24.3
26.0
25.0
30.0
Other
0.1
0.5
0.9
0.7
0.0
0.0
0.0
0.3
0.3
0.5
1.0
0.0
0.0
Bunkers
0.0
0.0
0.0
0.0
0.0
1.9
3.1
3.7
3.5
3.0
3.0
5.0
5.0
Losses
0.0
0.0
0.0
0.3
0.8
1.0
1.0
2.0
2.0
5.0
5.0
5.0
5.0
4.8
7.1
25.6
31.7
47.9
55.9
58.3
81.9
102.3
109.8
118.0
130.0
155.0
Estimated.
b Projected.
United Arab Emirates
Sectoral Oil Demand, by Fuel Type and Year
Industrial
10
0
0
5
15
Residential
0
0
0
0
15
Total
60
35
0
5
155
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According to official statistics, petroleum consump-
tion in the United Arab Emirates, currently estimated
at almost 120,000 b/d, grew at an average annual
rate of over 40 percent in the period 1973-82. In
recent years the growth rate has dropped sharply,
reflecting a slower pace of development because of
declining oil revenues and the completion of many
infrastructural projects. In addition, Emirate officials
expect future energy needs to be met largely by
natural gas or natural gas liquids (NGL), particularly
in the northern Emirates, which have had a series of
significant gas condensate finds over the past year. As
a result, we project domestic oil consumption within
the UAE to grow by only about 35,000 b/d between
now and 1990.
Transportation Sector
We estimate oil demand in the transportation sector
currently is about 45,000 b/d, and this should grow at
about 7 to 8 percent annually through 1990. Despite a
current economic slowdown, the UAE still has one of
the highest per capita incomes in the world; and, with
the added impact of revenue from the new oil finds in
the north, increasing personal and commercial travel
should push oil demand in this sector to 75,000 b/d by
1990.
Electric Power Sector
Electricity generation currently consumes over 45,000
b/d of oil products and is almost evenly divided
between diesel and residual fuel oils. Our projections
show demand for oil growing slowly through 1985,
when 50,000 b/d will be consumed in the electric
power sector. In the latter half of the decade, howev-
er, consumption should level off as natural gas and
NGLs are substituted for oil in northern power plants.
We also expect a shift away from distillate fuels in
favor of residual fuel oil. The latter is projected to
comprise 60 percent of the sector's oil consumption by
1990.
Industrial Sector
Industrial oil demand is not a significant factor in
overall oil consumption within the Emirates, and even
by 1990 we estimate it will still comprise less than 10
percent of total demand. According to trade publica-
tions, most of the new industrial projects coming on
line later in the decade are slated to use natural gas or
gas condensates for fuel.
Residential Sector
Residential demand for oil products, primarily kero-
sene, is currently about 10,000 b/d, and we expect it
to grow to 15,000 b/d by 1990. While electricity and
bottled gas supply most residential needs in urban
areas, we believe the growing population and a strong
nomadic tradition within the Emirates will underpin
small increases in demand for kerosene through the
end of the decade.
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Venezuela
Domestic Oil Consumption, by Fuel Type
Gasoline
Kerosene
Distillate
Residual
Other
Bunkers
Losses
Total
a Estimated.
b Projected.
87.4
11.5
35.3
25.9
36.9
48.8
25.5
271.3
94.7
11.6
38.9
21.8
30.2
44.1
30.1
271.4
105.3 117.1
11.9 12.9
41.5 45.6
23.0 22.3
28.1 36.9
25.3 24.8
24.0 19.5
279.1
131.4 143.1 152.6 158.5 163.4 168.1 165.0 175.0 205.0
13.6 13.7 14.6 13.9 13.5 14.4 15.0 15.0 20.0
45.5 58.1 65.8 76.5 80.4 83.2 85.0 100.0 125.0
17.6 23.7 36.5 54.8 61.4 62.2 65.0 70.0 85.0
38.1 37.4 33.8 44.7 43.2 52.1 57.0 60.0 70.0
24.4 23.1 27.2 18.7 19.3 17.4 18.0 20.0 25.0
19.4 22.7 20.0 25.7 26.7 27.8 28.0 30.0 40.0
290.0 321.8 350.5 392.8 407.9 425.2 433.0 470.0 570.0
Venezuela
Sectoral Oil Demand, by Fuel Type and Year
Transport 159 10 44 11 2 0 226
Electric 0 9 26 37 0 0 63
Industrial 0 0 6 25 43 26 100
Residential 0 4 0 0 0 0 4
Total 159 14 76 73 45 26 393
Transport 175 10 60 20 5 0 270
Electric 0 0 30 50 0 0 80
Industrial 0 0 10 20 55 30 115
Residential 0 5 0 0 0 0 5
Total 175 15 100 90 60 30 470
Transport 205 15 75 25 5 0 325
Electric 0 0 35 55 0 0 90
Industrial 0 0 15 30 65 40 150
Residential 0 5 0 0 0 0 5
Total 205 20 125 110 70 40 570
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Domestic oil consumption, currently about 435,000
b/d, will grow by approximately 4 percent annually to
about 570,000 b/d in 1990, slightly less than the
1973-80 period. We estimate that the transportation
sector will account for over 50 percent of the total
growth in consumption through 1990. Current plans
by Caracas to expand electric generation capacity will
rely primarily on hydropower, natural gas, and coal as
energy sources.
Transportation Sector
According to Embassy reporting, the government's
120-percent increase in the domestic price for gasoline
last year-moving from a weighted average of 20
cents to 44 cents per gallon-combined with continu-
ing stagnation in the Venezuelan economy, has signif-
icantly affected gasoline consumption, which we ex-
pect may actually drop somewhat this year. Nonprice
measures to curb gasoline use, such as lower speed
limits, restrictions of automobile use in the Caracas
area, Sunday closings of service stations in urban
areas, and a move to smaller engines will also lower
future gasoline demand. Furthermore, coming auster-
ity moves will almost certainly entail additional sharp
price hikes in 1984, following this year's presidential
election. We project gasoline demand to grow at
about 3 percent per year through 1990, less than half
the rate forecast by the government in 1980. If these
measures are successful, gasoline's share of domestic
demand, currently roughly 40 percent, may actually
drop several percentage points by the end of the
decade.
Official statistics show diesel fuel now comprises one-
fifth of total domestic consumption, and transporta-
tion accounts for almost 60 percent of diesel use.
Expansion and modernization of the rail system using
more diesel engines, increased truck travel from in-
dustries located in remote regions of the country, and
some growth in the construction industry contribute
to our projection of a 5-percent annual increase in
diesel demand through 1990. Still, this is a slowdown
from the 11-percent annual rate of the previous
decade.
Industrial consumption of oil is about 100,000 b/d,
mostly in the petroleum and petrochemical sectors.
xpansion of basic
industries, particularly steel and aluminum, and the
construction of metal-processing plants will be sup-
ported primarily by hydroelectric and natural gas
supplies and from developing coal reserves in the
northwest section of the country. The majority of the
50,000-b/d consumption growth we project in the
industrial sector this decade is accounted for by
increased petrochemical use of naptha and larger
refinery losses.
Recent cancellation of development projects within
the Orinoco heavy oil belt will significantly reduce oil
demand in this geographic region, which industry
sources once forecast to reach almost 75,000 b/d by
1990. The projects requiring large amounts of energy
to extract and convert heavy, viscous crude to a usable
oil have largely been scrapped, and the only one to
proceed uses conventional methods for the recovery of
oil. We expect, therefore, that additional oil demand
in the Orinoco region should not exceed 10,000 b/d
by 1990.
Electric Power Sector
According to government statistics, electric utilities
consume approximately 75,000 b/d of oil products in
Venezuela, and we project demand to grow to about
90,000 b/d by 1990. Residual fuel use doubled be-
tween 1978 and 1980 to about 37,000 b/d with the
startup of a new oil-fired power plant, but should slow
to a 4-percent growth rate for the remainder of the
decade. We estimate distillate fuel used in diesel
generators and gas turbines currently to be less than
30,000 b/d, growing only marginally to about 35,000
b/d by 1990.
Residential Sector
Residential demand for kerosene is at most about
5,000 b/d. We expect increased use of bottled gas and
electricity to offset growth in demand for cooking
fuels, and Venezuela's mild climate keeps space heat-
ing needs to a minimum.
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