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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Suncor: Energy Transition Will Destroy Oil Demand

Low-carbon technologies could disrupt global oil demand in the not-too-distant future the way COVID-19 crushed demand during the lockdowns worldwide, Mark Little, chief executive of one of Canada’s largest oil producers, Suncor Energy, wrote in an opinion piece published on Monday.

“The temporary economic lockdown triggered by the 2020 pandemic is giving us a glimpse into a not-too-distant future where the transformation of our energy system could disrupt demand on a similar scale. Disruption breeds opportunity and forward-looking companies and countries will need to step up and lead,” Little and Laura Kilcrease, CEO of Alberta Innovates, wrote in an article in the Corporate Knights magazine.  

According to Suncor’s chief executive, Canada’s oil sands industry is positioned to lead in some innovative low-carbon solutions, such as carbon fiber – a material increasingly important for producing lighter vehicles, including electric vehicles (EVs). Asphaltene makes up 15-20 percent of bitumen and is the feedstock for making carbon fibers, Suncor’s Little said.

“If we can figure out how to do this affordably at scale, it has the potential to quadruple the revenue from Alberta’s current bitumen output,’’ according to the executive.

Suncor’s manager also called for federal government support for disruptive technology that could unlock more value from Canada’s energy industry.

The warning from a top oil executive that the energy transition is set to disrupt oil demand comes amid one of the worst crises in the oil industry in the recent decades.

Some analysts argue that we may have already hit peak oil demand, considering that the pandemic might result in lasting changes in consumer behavior and lifestyles—and even the bosses of BP and Shell are not ruling out this notion.

Last month, Suncor Energy slashed its quarterly dividend by 55 percent to reduce its cash breakeven to a WTI Crude price of US$35 a barrel, as it reported a huge Q1 loss due to impairments stemming from the low oil prices.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on June 01 2020 said:
    This is more of a wishful thinking by Suncor’s chief executive or he might have jumped the gun about ideas yet to materlize.

    Whilst the COVID-19 crushed global oil demand by keeping more than half of the world’s population in lockdown unable to drive or fly, no low-carbon technologies could cause such damage to global oil demand.

    Moreover, an imminent global energy transition from oil and natural gas to renewables is an illusion. It isn’t going to happen throughout the 21st century and far beyond despite all the hype by media and other vested interests.

    Just recently shareholders of France’s oil giant Total overwhelmingly voted against a proposed resolution demanding that the company do more under the Paris Agreement goals. This could be the start of a rebellion against rising militancy among environmental activists’ and divestment campaigns against oil and gas. It may not be limited to Total’s shareholders but may spread around the whole oil industry.

    In another development, the CEOs of ExxonMobil and Shell the world’s two biggest supermajors recently poured cold water on environmental activists’ arguments and made their positions on peak oil demand very clear. Darren Woods the chief executive of ExxonMobil demolished the environmental activists’ arguments when he declared that “the long-term fundamentals that drive our business have not changed." This was echoed by Shell’s CEO Ben Van Beurden who said that it is entirely legitimate to invest in oil and gas because the world demands it". "We have no choice."

    It was also echoed by the International Energy Agency (IEA) saying “the world hasn’t seen peak oil demand yet, expecting that sooner or later, oil consumption would return to the pre-coronavirus levels and rise above it”.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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