According to BP’s Statistical Review of World Energy 2005 released in June, the world energy markets were dominated by demand growth for all forms of energy in 2004. Growth in demand from China was particularly exceptional, but the strong demand growth was a general global phenomenon, increasing above the 10-year trend in every region of the world.

“The world’s overall energy consumption grew by 4.3% in 2004. In volume terms, this is the largest-ever annual increase in global primary energy consumption and is the highest percentage growth since 1984”, explained BP chief economist Peter Davies at the launch of the review, which contains data series on production and consumption of energy worldwide up to the end of 2004. “It is exceptional that this demand growth was so geographically widespread.”

China’s economy grew 9.5% in 2004, but this was outstripped by the rise in the country’s energy demand, which rose 15.1% last year. China’s energy demand has risen by 65% in the last three years, accounting for more than half of the increase in global demand in the same period. The country’s energy consumption now amounts to 13.6% of the world total.

Outside China, world energy demand increased by 2.8%, which is the fastest growth since 1996 and around twice the rate of the previous two years. Demand grew by 4.8% from non-OECD countries (excluding China), which is roughly three times as fast as from OECD countries. This non-OECD growth was lead by India where demand rose by 7.2%.

Oil

Oil consumption rose by 3.4% in 2004, or 2.5 MMbpd – the fastest rate of growth since 1978. China accounted for over a third of this growth (up 15.8% or almost 900,000 bpd). The 2004 rise in demand occurred despite record oil prices, averaging US$38.27 a bbl – up almost 33% from 2003. Oil output grew to meet the demand by exceeding 80 MMbpd for the first time.

In 2004, production outside OPEC rose by 965,000 bpd, led by Russia with nearly 750,000 bpd, whereas OPEC production rose by almost 8% to 32.9 MMbpd, led by Iraq where production grew by 667,000 bpd to 2 MMbpd. This was the largest increase in OPEC production since 1986 and the highest level ever.

Natural gas

World consumption of gas rose by 3.3% in 2004, which is above the 10-year average of 2.6%, but the consumption in North America was flat due to high prices and mild weather. Production rose in every region except North America.

Gas prices also increased – the average Henry Hub US gas price increased to US$5.85MMbtu, while gas prices in other regions grew more rapidly.

Coal, nuclear and hydroelectric

Coal was the fastest growing fuel globally in 2004, but also the slowest if one excludes Chinese d emand. Apart from China, almost all other demand growth came from Asia Pacific. Coal prices also rose the fastest of all traded fossil fuels – the European marker price increased by 69%. This was driven by declines in Chinese coal exports as domestic demand increased; shortages in high-grade coal; and increases in transport costs.

After a rare decline in 2003, world nuclear consumption increased by 4.4%, much due to recovery in Japan, which accounted for half of this growth. Capacity and efficiency increased globally and US nuclear output rose 3.2% to its highest level ever.

Global hydroelectric generation grew by 5% because of a strong 16.6% rise in China as new capacity came online, as well as recovery from drought and better rainfall in Europe and Eurasia.

The BP Statistical Review of World Energy is published annually and the 2005 version can be obtained from: http://www.bp.com/statisticalreview.