Energy experts say oil is here to stay

While several international energy organizations and leading sector experts expect global oil demand to begin to decline by the end of the decade, some oil companies expect oil demand to remain high for decades to come. ExxonMobil and Aramco are just a few of the companies that have said they will keep pumping crude in anticipation of continued high demand for fossil fuels over the next decade and beyond.

In its World Energy Outlook 2023, the International Energy Agency (IEA) predicts that global oil and gas demand will peak at the end of the decade as governments around the world invest in increasing their renewable energy capacity and more consumers use vehicles electric vehicles (EVs). ). The perspective was based on existing government policies worldwide. The Executive Director of AIE, Fatih Birol, he stated“The transition to clean energy is happening around the world and it is unstoppable. It’s not a matter of ‘if’, it’s just a matter of ‘how soon’ – and the sooner the better for all of us.”

After 2030, according to the IEA, coal demand is expected to begin to decline sharply. Meanwhile, gas and oil consumption will remain near peak levels for the next two decades. The agency called on governments and energy companies around the world to stop investing in new oil and gas activities and instead invest in renewable energy and clean technology to support an accelerated shift away from fossil fuels. She believes that if this is done, it could lead to a sharper decline in demand for oil and gas in the coming decades.

However, in August, US oil major ExxonMobil estimated that oil and gas is expected to contribute more than half of the world’s energy mix in 2050, about 67%, even with increased global efforts to accelerate a green transition. Currently, fossil fuels account for approximately 80% of the global energy mix, according to the IEA. of Exxon forecast predicts that while global oil demand will stabilize from the end of this decade, it will remain above 100 million barrels per day until at least 2050.

While Exxon agrees that demand for oil to make gasoline will decline over the next quarter century as electric vehicle uptake rises sharply, oil used in manufacturing, chemical production and heavy transportation will remain high. Exxon predicts that oil demand will remain at about 85 million bpd until 2050, even if all new cars sold worldwide by 2035 are electric. Contrary to the IEA’s recommendations, Exxon has suggested that investment in new fossil fuel projects must keep pace with global demand. The oil major warned that if this does not happen, the world will experience a supply shock which will cause prices to rise and lead to an economic crisis.

British oil major BP expects oil demand could peak as early as 2025, but global demand will remain high until 2035. The company’s 2024 Energy Outlook predicts global oil demand will decline very gradually from around 100 million bpd currently at 97.8 million bpd in 2035. BP highlights the gap between the developed and developing world as many high-income countries push for a green transition by increasing their renewable energy capacity, while more low-income countries undergo industrialization, which will lead to increased demand for fossil fuels. While the IEA calls for a shift in investment priorities and greater support for increasing the developing world’s green energy capacity, in reality the gap is widening as “the rich developed world, which becomes less rich as it directs ever-increasing cash flows to transition, and the poor developing world, which becomes richer as it consumes more and more hydrocarbon energy “.

Both Exxon and BP believe, as does the IEA, that oil demand will peak soon. However, both are pessimistic about how much this demand will decline in the coming decades. This led Exxon to require greater investment in oil production to meet this high demand. It’s a sentiment that has been reiterated by Saudi Aramco CEO Amin Nasser, who sees the IEA’s pressure to finance oil and gas as risky. Nasser said in March that the energy transition fails and called the idea of ​​phasing out oil and natural gas a “fantasy” as demand continues to rise in emerging economies.

We are at a crossroads, with continued funding of new fossil fuel projects leading to sustained demand and the green transition, supported by public and private investment in developing renewable energy capacity in both the developed and developing world. course of development, reducing the overall level. demand for fossil fuels. The latter would require a major shift in investment plans, as well as high levels of financial support for low-income countries, which is not currently happening at the speed required to achieve the climate goals of the Paris Agreement. If no such change occurs in the next few years, companies like Exxon and Aramco will continue to invest heavily in oil and gas, which could lead to a vicious cycle of supply and demand, as well as delay a global green transition .

By Felicity Bradstock for Oilprice.com

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