Demand picks up, raising imports
Greater investments, improved efficiencies and new licences could boost share of indigenous supplies
- Production: UK and Norway produce more than 80% of Europe’s oil
- Demand: A high level of demand continues
Sustained growth in demand keeps import levels stable
With only 4% of the world’s production but 15% of demand, Europe has long imported most of the oil it needs to maintain the region’s prosperity and well-being.
For the last five years, Europe’s Production Indicator for oil has remained in the 23-25% range, requiring Europe to import three quarters of its oil needs. Only between 1994 and 2003 did the region maintain a Production Indicator of more than 40%, when both Norway and the UK were producing oil from the North Sea at close to record levels. Europe produced its highest volumes of oil in the early 2000s, with almost 7 million barrels per day of indigenous crude.
In 2017, European production stood at 3.5 million barrels per day, 30% less than in 2007.
For decades, volumes of imported oil were about 10–11 million barrels per day. In 2017, rising demand pushed import levels marginally higher to 11.5 million barrels of oil per day.
The biggest oil producer in Europe is Norway. With almost 2 million barrels per day, it has a 56% share of the region’s total. The UK is the second largest producer, accounting for 28%, equivalent to about 1 million barrels per day.
A major oil consumer
Europe’s appetite for oil is getting more robust. In 2017, the region got through around 15 million barrels of oil per day, the highest rate of consumption since 2010.
Germany is Europe’s largest user of oil, accounting for 16% of the region’s demand in 2017, equivalent to 2.4 million barrels per day.
The UK and France are joint second highest users, accounting for 11% of Europe’s total consumption each. While the UK had achieved oil self-sufficiency thanks to North Sea production, since 2006 it has increasingly relied on imports to meet demand. In 2017, the UK’s Oil Production Indicator was down to 63%, meaning that over a third of its oil now needs to come from elsewhere.
Spain is Europe’s third-ranking nation in terms of oil demand, accounting for 9% of the total, followed by Italy with 8%.
What remains and where
According to Wood Mackenzie, Europe holds 32 billion barrels of recoverable oil in reserve. This could sustain current production levels for another 15-25 years. Continuing development, however, would rely on responsive fiscal frameworks and strong cooperation betweenregulators and industry.
Europe: a competitive oil producer with a lower carbon footprint
It is interesting to see that despite the demand drop which begun a decade ago, we are now back to the average level seen over the past 50 years in Europe. The manufacturing sector’s needs are driven by demand for petrochemicals, accompanying the region’s economic recovery. Parallel to its use as feedstock for high-tech polymers and advanced materials needed for the energy transitions, oil remains an affordable mobility option for millions of Europeans, even as alternative methods emerge.
Companies can be proud of what they’ve achieved in Europe. The efficiency gains of the past few years in the exploration & production sector are paying off. The region remains competitive from a production perspective and its carbon footprint is among the lowest in the world: one barrel of oil produced in Europe has a 30% lower carbon footprint compared to an imported barrel of oil. Policies incentivizing production, such as the ones put in place by the UK, have had a strong and positive impact. By working closely with governments, our industry can help them sustain this healthy share of domestic production as long as possible.
François-Régis Mouton, Director European Affairs, IOGP