Global crude oil demand growth will slow to a crawl and gasoline use will peak within the next decade, prompting the world’s biggest energy companies to accelerate the shift to natural gas and chemicals, according to energy consultant Wood Mackenzie. Oil consumption will keep expanding until at least 2035 as the petrochemical industry, which provides the building blocks to manufacture everything from plastics to pesticides, makes up for the contraction in some transport fuels, Petrochemicals will increase its consumption of crude oil feedstock by 50% from 2017 to 2035. The world’s largest integrated energy companies are already preparing for the future, largely through investments in natural gas. They see this fuel playing a greater role in emerging markets including China and India, which are battling air pollution from coal-fired electric power stations. Last year Shell’s purchase of BG Group Plc consolidated its position as the world’s largest producer and trader of liquefied natural gas (LNG).

The prospect of peak oil demand is hotly contested in the energy industry. Some companies, including Royal Dutch Shell and BP, anticipate it happening between 2025 and 2040. Others, such as Exxon Mobil and Chevron still forecast decades of uninterrupted growth. In its latest look at the crude oil market, Wood Mackenzie finds by 2035 oil consumption will have plateaued in Europe, the US, China and Japan but will still be growing in India and some other parts of Asia, Latin America, Africa and the Middle East. This week the head of the world’s largest oil company, Saudi Aramco, said crude oil demand will remain robust in the shipping, aviation and petrochemicals business over the next several decades even as electric cars erode demand. Amin Nassar commented:

“Electric vehicles will continue to grow. They will take good market share, but it will be decades before they shoulder a significant percentage of the energy mix.”

With the demand for electric cars forecast to rise significantly over the next decade, much has been written about the need to obtain supplies of important battery minerals like lithium and cobalt. As Earth’s Energy recently reported, Volkswagen failed in its attempt to obtain a long-term (30 year) guarantee supply of cobalt. Now we find China is going around the world looking to buy suppliers of these minerals. This week we learned Sinochem, China’s state chemical group, is among bidders for a $4 billion stake in Chile’s SQM, one of the world’s largest producers of lithium, a key component in EV batteries. Other Chinese bidders include private equity firm, China’s GSR Capital, Ningbo Shanshan, a battery materials company, and China’s largest lithium producer, Tianqi Lithium. The sale comes as Chinese companies are attempting to secure supplies of battery materials to meet their government’s ambitious to expand production of electric vehicles starting next year. China is the world’s largest electric car market and it wants to dominate global production of lithium-ion batteries. In August, GSR bought Nissan’s electric vehicle battery business. Recently, Chinese automaker Great Wall Motor entered into a 5-year agreement with Pilbara Minerals, the Australian lithium miner, This week Jiangxi Special Electric Motor, which makes EVs and lithium batteries, said it purchased an 11% stake in Australian lithium producer, Tawana Resources NL. Last year, China Molybdenum bought the Tenke copper and cobalt mine in the Democratic Republic of Congo.

Xu Heyi, chairman of Chinese automaker BAIC Group, said China’s electric vehicle production could reach 1 million vehicles next year and 3 million by 2020.

One of the world’s largest mineral company, BHP in Australia, is increasing its production of nickel after being inundated with requests from electric car battery producers. Powdered nickel is used in lithium ion batteries. BHP’s Eddy Haegel announced the company’s plans to substantially increase production as well as enter into downstream refining of nickel and added the EV battery industry could account for half for its sales by the end of next year.

The Shanghai Daily writes about how the world auto industry is retooling for the mass production of electric cars in China. The article notes that both German auto supplies Continental and Bosch are independently developing new electric drives to be ready for 2019 for Chinese pure electrics and hybrids.

The Chinese government announced it will require all new electric cars to use Chinese-produced batteries. Quick off the mark, Tesla announced this week it will be building an EV battery plant in China.

According to a UBS report that compared an internal combustion Volkswagen Golf with an electric Chevrolet Bolt, 56% of the electric vehicle content comes from outside the traditional auto-supply chain. For example, the entire electric powertrain and infotainment modules of the Chevrolet Bolt are supplied by electronics company LG. The investment bank also predicted the highly profitable automobile spare parts business will decline by 60% in a 100% EV world.

Globally, 23 countries have public hydrogen refueling stations deployed, with the number of stations totaling a little over 250. Asia leads the world in hydrogen station deployments followed by Europe.  Japan has more hydrogen stations than any other country in the world, followed by the US (mainly in the state of California), and Germany.

 

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