Growing demand in Asia means that the age of oil isn’t over yet, although consumption in developed western economies has trended lower over the past decade, according to Karin Kneissl, a newly appointed director on the board of Russia’s oil giant Rosneft.
“I’ve always underlined that it’s the East that plays the decisive role, not the West. And the energy market is more dynamically developing in the East. And you shouldn’t also discount the African continent,” said Kneissl, who was Austria’s foreign minister between 2017 and 2019.
Continued growth in oil demand in Asia, due to increased economic prosperity and rising population, will shape the global trend in oil demand, Kneissl said at the St. Petersburg International Economic Forum, as quoted by Sputnik.
According to the new independent board member of Russia’s largest oil company, the current global push toward green energy and the stigmatization of fossil fuels and fossil fuel funding could result in a new supercycle for oil.
“Any type of energy has its implications for the environment. But political persecution of a certain industry leads to reduced investments, a freeze of production, leading to the deficit, which, in turn, marks the beginning of a new supercycle,” said Kneissl, as carried by Sputnik.
At the same forum in Russia, Rosneft’s chief executive officer Igor Sechin warned on Saturday that underinvestment in oil and gas projects puts the stability of global oil supply at risk, and “the world runs the risk of facing an acute deficit of oil and gas.”
“This is due to both requirements of various stakeholders to completely cease investments in the petroleum sector and the aspirations of majors to increase shareholder value and shareholder returns through stronger dividend payout and share buyback,” Sechin said.
“The world consumes oil, but is not ready to invest in it,” Sechin added.
Rosneft’s low exploration costs of below $3 per barrel give the oil giant an advantage over rivals, Kneissl told Reuters in an interview at the St. Petersburg forum.
By Tsvetana Paraskova for Oilprice.com
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The global demand for oil will continue to rise well into the future underpinned by rising world population projected to expand from 7.9 billion now to 9.7 billion by 2050, a global economy projected to grow from $91 trillion now to $267 trillion by 2050 also and growing oil demand in Asia. Asia led by China will continue to be the driver of both the global economy and the global oil demand.
The persistent pressure from environmental activists and divestment campaigners on the global oil industry to divest of its oil and gas assets could undermine investments in oil exploration and production and lead to a serious supply deficit in the not-too-distant future. This could push oil prices upward to $150-$200 a barrel.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London