Global oil demand to peak by 2025, UN tracked: Platts Analytics

Strong points

Demand for crude oil and condensate to decline to 50 million barrels per day by 2050

OPEC’s oil market share would rise to 60%

New upstream projects are still needed to compensate for field declines

Global demand for crude oil and condensate would peak in four years and fall by 40% over the next three decades if the world followed the path set by the UN Intergovernmental Panel on Climate Change, or IPCC, where global warming is limited to 1.5 C or 2 degrees C, according to S&P Global Analytics.

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Noting the recent IPCC report on global warming, Platts Analytics said that a scenario in which warming is limited to 2 ° C would see demand for crude and condensate collapse to 50 million bpd in 2050, against around 99 million b / d expected in 2021, after peaking at 104.5 million b / d in 2015.

On August 9, the IPCC warned that limiting global warming to 1.5 ° C or 2 ° C could soon be “out of reach” without “immediate, rapid and large-scale reductions” in emissions.

peak 2040 currently seen

But Platts Analytics’ current baseline scenario assumes that total liquid supply and demand will peak around 2040 at 111 million b / d and gradually decline to 108 million b / d by 2050.

“Unless there is substantial government intervention to accelerate the transition from fuels to low-carbon energy carriers, it will be difficult to limit global warming from liquid hydrocarbon emissions,” said Rene. Santos, North America sourcing and production manager for Platt Analytics, in a note.

Even so, environmental groups such as Greenpeace see the IPCC report as a powerful legal weapon in the growing fight against climate change.

Greenpeace is already gearing up to clash with UK authorities for upstream development expected in the final stage of legal battles threatening Europe’s oil and gas industry.

In May, a Dutch district court, responding to a case brought by the local Friends of the Earth chapter, ordered Shell to reduce its carbon footprint by 45% by 2030, a decision the Anglo-Dutch major is making. call.

Drilling bans

If the world shifts to a much faster decarbonization trajectory, demand for transportation fuels such as gasoline and diesel will be hit the hardest, according to Platts Analytics, due to accelerated penetration of alternative vehicles and fuels. clean.

With reliance on low-carbon, low-cost oil also being a priority, OPEC’s market share is expected to drop from 40% in a baseline scenario to around 60% by 2050 with a rapid decline in shale. American, Platts Analytics said.

Regionally, South Asia and China are expected to experience positive growth in net oil demand over the 2015-2050 period, however, due to “the underlying fundamental strength”. China’s oil demand would peak at just over 18 million barrels per day this decade before declining to 14 million barrels per day by 2050, Platts Analytics said.

Pressure to ban further exploration

Pressure on governments to ban new and upstream exploration projects has increased recently after the International Energy Agency said in May that no new oil and gas resources were needed in the framework of a global path to achieve net zero emissions by 2050.

But Platts Analytics said calls for a moratorium on future exploration and upstream developments would be premature, as rates of production decline in existing fields would still exceed the expected global contraction in demand in a 2C scenario.

“A 2D perspective requires not only the development of all currently committed oil projects (OPEC and non-OPEC), but also the development of lower cost uncommitted projects (primarily core-OPEC),” Platts Analytics said. “A complete halt to the development of new oil supplies from 2022 would not be sufficient to meet demand from a 2D C perspective.”

According to the IEA’s historic roadmap to net zero released in May, oil supplies are expected to decline by more than 8% per year, reaching 24 million barrels per day in 2050 from pre-July levels. pandemic of just over 100 million barrels per day.

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Felix J. Dixon