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Oil rigs on platforms at Gaoyu Lake in eastern China’s Jiangsu Province on Friday, September 17, 2021.
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Oil and gas will remain major sources of energy for decades to come on the back of a delayed energy transition, major industry players said at the Asia Energy Conference in Kuala Lumpur, Malaysia, this week.
“We think the biggest realization that should come out of this conference … is that oil and gas are essential for decades to come,” said John Hess, CEO of the US oil company Hess Corporation.
He continued, “The energy transition will take much longer, cost a lot of money and require new technologies that do not even exist today.”
When it comes to clean energy, Hess said, the world needs to invest $4 trillion a year — and it’s not coming soon.
According to the International Energy AgencyGlobal investment in clean energy is set to rise to $1.7 trillion in 2023.
Demand forecasts (India) make us compelled to build new refineries.
AS Sahney
Executive Director of the Indian Oil Corporation
Hess said that oil and gas are key to the world’s economic competitiveness, as well as an affordable and secure energy transition.
He predicted that the oil market would be more positive in the second half of the year, as production would rise to 1.2 million barrels per day in 2027. He noted that the biggest challenge facing the world is the lack of investment in the industry.
“The world is facing a structural deficit in the supply of energy, oil, gas and clean energy,” he said.
Similarly, in the opening speech of the conference, the Secretary-General of OPEC predicted that global oil demand will rise to 110 million barrels per day by 2045. Haitham Al-Ghais said that the growth comes on the back of rapid urbanization over the next few years.
John Hess, CEO of Hess Corp. Speaking during the Asia Energy Summit, in Kuala Lumpur, Malaysia.
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And in an email exchange on Tuesday, ExxonMobil, the largest US oil producer, reiterated the same.
The company expects oil to remain the largest major source of energy for at least another two decades due to its vital place in commercial transportation and the chemical industries.
“Liquids are expected to remain the world’s leading energy source in 2050, even as demand growth slows beyond 2025,” Erin McGrath, senior advisor for public and government affairs at ExxonMobil, told CNBC.
“Overall, liquids demand is expected to increase by about 15 million barrels per day by 2050. Almost all of the growth will come from emerging markets in Asia, Africa, the Middle East and Latin America.”
The main drivers?
Asia will continue to stimulate demand for oil and gas, Growth in the region is set to outpace the US and Europe by the end of the year.
“This is the area where energy demand growth will be and more to come,” Dan Yergen, vice president of Standard & Poor’s Global, said at the Energy Conference. He said that the population of Southeast Asia alone is 50% more than that of the European Union.
Growth in LNG markets last year was driven by China, India, Korea, Japan and Vietnam, Chairman of the Board of Directors of the French Petroleum Energy Company. Total energy He said.
said Patrick Pouyanne, CEO of TotalEnergies.
Similarly for oil, one of the largest Indian oil companies has increased refining capacities.
“We are probably one of the few companies, one of the few countries that will increase refining capacities in the next three to four years by 20%,” AS Sahney of the Indian Oil Corporation said in a separate panel discussion.
“This shows our belief in (the sustainability of) fuels,” the CEO said, acknowledging that the energy transition is here to stay.
“But at the same time, the country’s demand forecasts make us compelled to build new refineries,” he continued.
According to the International Energy Agency, India is expected to see the largest increase in a country’s energy demand – Demand is expected to increase by more than 3% as it becomes the world’s most populous country by 2025.
Saudi Arabia’s state-owned oil giant Aramco is also banking on hopes that China and India will drive oil demand growth by more than two million barrels per day, at least for the rest of this year.
CEO Amin Nasser, during his speech at the summit, said that once the broader global economy begins to recover, the industry’s supply and demand balances could contract.
Oil demand ‘an old story’
Commodity trading firm Vitol is less optimistic, predicting that demand for crude oil will peak in 2030 — two years later than the International Energy Agency forecast.
“We peaked around 2030 and gradually decreased until 2040 … and then (a) rapid decline after that as the electric vehicle fleet and the energy transition took over,” Vitol CEO Russell Hardy said during a panel discussion.
While the industry faces good fundamentals in the next few months, continued Russian oil production and faltering Chinese growth complicate predictions of where prices will go.
“The supply side is slightly overvalued, especially (in) Russia where there was a lot of speculation about a production loss as a result of the difficulty in getting oil to market due to sanctions,” Hardy said.
“Because of the global economic hardship at the moment, China’s recovery is slightly stalled,” he said, noting that China’s demand for oil was not as strong as expected.
He pointed out that Europe and the United States have less demand by one and a half million barrels per day compared to 2019, as more consumers turn towards renewable energy sources in Europe and Asia.
“So the demand is an old story.”
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