Supply of EVs and Replacing Oil Demand

As of 2023, global gasoline and diesel usage was 27.18 million b/d and 2,848 b/d, respectively, accounting for 54% of the total petroleum product usage of 1.02 billion b/d.

And currently, 48.42 million b/d, or about 87% of gasoline/light oil usage, is used for transportation, directly affected by 1) tightening energy regulations and 2) rising EV penetration rates.

As of the end of 2023, the penetration rate of global EVs (including PHEVs) among vehicles in operation is estimated to reach 3%.

Oil demand to be replaced by EVs of that size is approximately 1.45 million b/d (45.24% of total oil consumption), which is significant enough to reach the increase in total oil demand in 2024.

As EV penetration accelerates, demand for oil to be replaced is also expected to increase rapidly, and BNEF predicts that demand for oil will disappear by about 3.2 million b/d due to EV growth by 2030.

Some refiners have adopted the idea of expanding their chemical portfolios, which can create synergy with their refineries, as a strategy to overcome the crisis, instead of shifting their business areas to renewable energy to replace oil.

Global ethylene demand has been increasing to +3% per year since 2015, as population growth and economic growth are driving the increase in petrochemical demand.

CRUDE OIL TO CHEMICALS (COTC) refers to a technology that reduces the processing process of crude oil and maximizes the proportion of petrochemical production compared to the existing process of making chemical products after producing lead through an oil refining process.

Compared to traditional integration, it has a much higher chemical conversion rate of 40 to 70%, and can enjoy cost savings such as carbon emissions reduction and utilities.

Key Takeaways:

• Gasoline and diesel dominate global petroleum usage: Accounting for 54% of total petroleum product usage, gasoline and diesel remain crucial fuels.
• Transportation is the primary driver of gasoline/light oil demand: 87% of gasoline/light oil usage is for transportation, making it directly vulnerable to energy regulations and EV penetration.
• EV penetration is impacting oil demand: With EV penetration reaching 3% by 2023, the demand for oil replaced by EVs is significant, reaching approximately 1.45 million b/d, enough to offset the projected increase in total oil demand in 2024.
• EV growth poses a major threat to oil demand: BNEF forecasts that EV growth will eliminate approximately 3.2 million b/d of oil demand by 2030.
• Refiners are exploring alternative strategies: To navigate the evolving landscape, refiners are exploring options like expanding their chemical portfolios, creating synergy with existing refineries, instead of fully shifting to renewable energy.
• Petrochemical demand is on the rise: Global ethylene demand has grown by 3% annually since 2015, driven by population and economic growth.
• COTC technology offers a potential solution: This technology maximizes petrochemical production from crude oil, leading to a higher chemical conversion rate (40-70%) and cost savings through reduced emissions and utilities.