Global oil demand will peak by 2025 according to UN path: Platts Analytics

Strong points

Crude and condensate demand would shrink to 50 million b/d by 2050

OPEC’s oil market share would increase to 60%

New upstream projects are still needed to offset field declines

Global demand for crude and condensate would peak in four years and fall by 40% over the next three decades if the world follows the path set by the UN’s 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.

Not registered?

Receive daily email alerts, subscriber notes, and personalize your experience.

Register now

Noting the recent IPCC report on global warming, Platts Analytics said 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 1.5C or 2C could soon be “out of reach” without “immediate, rapid and large-scale reductions” in emissions.

2040 peak currently observed

But the current Platts Analytics Reference Case assumes that total liquids supply and demand will peak around 2040 at 111 million bpd and gradually decline to 108 million bpd by 2050.

“Unless there is substantial government intervention to accelerate the shift of fuels to low-carbon energy carriers, it will be difficult to limit global warming from liquid hydrocarbon emissions,” said Rene. Santos, head of North American sourcing and production 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 preparing to clash with UK authorities over a planned upstream development in the latest 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 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 a priority, OPEC’s market share is expected to rise from 40% in a baseline scenario to around 60% by 2050 with a rapid decline in shale American, said Platts Analytics.

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

Pressure to ban further exploration

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

But Platts Analytics said calls for a moratorium on future exploration and upstream development would be premature because the rates of decline in production at existing fields would still exceed the expected global contraction in demand under 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 in 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 net zero roadmap released in May, oil supplies are expected to decline by more than 8% per year, to 24 million bpd in 2050 from pre-pandemic levels of a just over 100 million bpd.

Source link

Felix J. Dixon