Oil Production Forecasting Models and Oil End-Use Optimization Framework under Global Energy Transition Dynamics

Abstract

This paper reviews oil (and gas) supply forecasting models and subsequently espouses atypical modeling approaches for the optimal allocation of crude oil production. This paper becomes imperative within the context of the global energy transition and the future of the oil and gas industry in Africa in general and Nigeria, in particular. A categorization framework has been utilized to classify oil supply forecasting models based on regional focus, modelling techniques, and outcomes. The log – log functional form is adopted in this paper to forecast oil production in Nigeria and subsequently optimize its allocation. A review of literature indicates that oil (and gas) supply forecasting has a long history and in recent times, there has been the tendency to rely on models that integrate engineering with economics. The models used to project oil and gas production to meet climate goals have now inputted environmental targets. This review of oil production forecast models is carried out against the backdrop of the need to optimally allocate Nigeria's future oil production to diverse uses. This will have impact on expected oil export earnings, domestic fuels’ imports, and the potential for petroleum products’ export earnings.