Africa will emerge as one of the "strongest areas of GDP growth" by 2040, according to ExxonMobil in its latest energy outlook.
The oil giant estimates Africa's population to grow by 800 million from 2010 to 2040 - the region with the biggest increase in population.
The continent's population will reach 1.79 billion by 2040, second only to Asia Pacific's 4.59 billion during the same period.
"With Africa showing even greater population growth, we expect a higher percentage of working-age people," said ExxonMobil.
"These demographic trends will help position India and Africa to become two of the strongest areas of GDP growth over the Outlook period [2010-2040], as long as these regions can equip their expanding working-age population with the right skills and create new sources of value and productive jobs that can grow their economies and expand prosperity."
Africa's GDP is expected to grow by an average of about 4% annually through 2040. An exploding population and rising GDP will make huge demands on energy resources.
Africa's energy demand is set to more than double from 29 quadrillion British thermal units (Btu) in 2010, to include 61 quadrillion Btu by 2040. Oil and wood-based biomass will account for 60% of the energy source in the future.
Natural gas and coal together will account for 36%. Interestingly, ExxonMobil expects Africa's renewable energy sources to be negligible.
Africa's electricity demand is estimated to rise 335% over the next 30 years, as incomes rise and legions of Africans move into the middle-income bracket.
Biomass reliance remains high
The World Bank estimates that up to 81% of Sub-Saharan African households rely on wood-based biomass for their cooking needs.
"Rough estimates indicate that the charcoal industry in Sub-Saharan Africa was worth more than USD 8 billion in 2007, with more than seven million people dependent on the sector for their livelihoods," the World Bank said. "In line with consumption predictions of the IEA, the economic value of the charcoal industry in SSA may exceed USD 12 billion by 2030, employing almost 12 million people."
The biomass industry is unlikely to fade away and, as the ExxonMobil forecast suggests, it will remain a source of revenues, jobs and pollution in much of Africa.
In Kenya alone, the sector employs 700,000 people and generates USD 450 million each year, roughly equivalent to its high-profile tea industry.
"Modernizing the wood-based biomass energy sector has the potential of significantly increasing the revenue base of most SSA countries, unlocking resources urgently needed for investments in natural resources and other key areas for sustainable economic development and green growth," said the bank.
Africa will lead emerging markets' rise in population growth, economic expansion and greater use of energy resources.
"Total world households will be up almost 50%, with 90% of the growth occurring in developing countries," the oil company said. "This is a particularly important driver for residential energy demand, as many energy-consuming activities are conducted on a household basis. In the future, more prosperity and improved living standards in the developing world will mean more air-conditioning systems, appliances and electronic devices driving demand."
Indeed, energy demand in emerging economies will rise 65% during the outlook period, especially if you take into account that 1.3 billion still don't have access to electricity and 2.6 billion people still don't have access to modern cooking fuels.
Alternative energy's rising influence
While rival Royal Dutch Shell's energy outlook seemed to flirt with the idea that solar could be a dominant energy source somewhere around 2050, ExxonMobil continues to believe in the dominance of oil well beyond 2040.
"Oil is projected to remain the No. 1 fuel; however, alternative sources such as nuclear, wind, solar and biofuel will take on an increasingly large role in meeting the world's energy needs in the future," said ExxonMobil.
Meanwhile, natural gas is set to overtake coal as the world's second largest energy source.
Still, the oil giant appears dismissive of OPEC's output, expecting it to decline slightly over time.
In its stead, Exxon believes 'unconventional' liquids from tight oil, oil sands, deep-water will make up for the shortfall, as technology will allow access to previously inaccessible resources.
"By 2040, only about 55% of the world's liquid supply will come from conventional crude oil production," said ExxonMobil. "The rest will be provided by deep-water, tight oil and NGLs, as well as oil sands and biofuels, as technology enables increased development of these resources."
Nigeria and Angola's deep-water growth will lead African surge in production. Meanwhile, Africa is also sitting on considerable natural gas reserves of 3,100 trillion cubic feet, which should feed other emerging markets.
What oil giants are saying...
Periodic reports from major oil companies like Royal Dutch Shell, ExxonMobil and BP are powerful telescopes that allow us a peak into future trends.
Of course, they are not always accurate gauges and are sometimes self-serving, but with oil companies pouring billions of dollars in investment based on their own outlook, it allows us to eavesdrop in on the conversations taking place in some of the world's most powerful energy companies.
ExxonMobil is reportedly spending USD 185 billion over the next five years mostly on unconventional oil and gas resources across the world including Russia, United States, the Middle East and Africa.
Its key findings in its current Outlook include the following: Energy-savings in OECD will mean energy use will be essentially flat in the developed world even though economic growth will rise 80% during the 2010-2040 period. Energy demand in emerging markets will rise 65% by 2040, while overall, global energy demand will grow 35%.
"With this growth comes a greater demand for electricity. Today, and over the next few decades, electricity generation represents the largest driver of demand for energy," the report said. "Through 2040, it will account for more than half of the increase in global energy demand."
While energy demand in the transportation sector will initially rise as more African, Indian and Chinese buy more cars, energy consumed by personal vehicles will eventually fall as cars become more fuel-efficient.
Technology advances will allow companies to access "once hard-to-produce energy resources, significantly expanding available supplies to meet the world's changing energy needs."
Meanwhile, North America will become a net exporter of oil and oil-based products, which would lead to new trading opportunities.
RELATED LINKS: Will solar eclipse oil?
Is it Game over For OPEC
© alifarabia.com 2013
