Crude oil is in "decline mode" in the long term, OPEC heavyweight the United Arab Emirates (UAE) says.
"To assume oil is going to be there forever is wishful thinking," the UAE's Energy Minister Suhail Al-Mazrouei said at the ADIPEC energy conference, as carried by Bloomberg.
"No matter how much we defend it, it's in decline mode," said the official from the UAE, one of the most influential members of OPEC and a major crude oil exporter.
Earlier this week, OPEC presented its annual World Oil Outlook at ADIPEC, in which it forecast that demand for oil would continue to grow all the way through 2045. Oil is expected to retain the largest share in the energy mix, accounting for almost a 29% share in 2045, the cartel said. In OPEC's view, all major fuel types, with the exception of coal, will see demand growth through 2045. Moreover, OPEC also said that the global oil sector would need a cumulative investment of $12.1 trillion in the upstream, midstream, and downstream through to 2045, equating to over $500 billion each year.
OPEC's rosier outlook on oil demand is in contrast with projections from other forecasters and analysts who see the early 2030s as the possible time of peak oil demand.
The International Energy Agency (IEA), an advocate of the energy transition and net-zero emissions by 2050, said in its own world energy outlook last week that fossil fuel consumption is expected to peak or plateau within this decade, accelerated by the policy and trade flow shifts following the Russian invasion of Ukraine. For the first time ever, a World Energy Outlook scenario from the IEA based on current government policies and settings has the global demand for every fossil fuel showing a peak or plateau, the agency said in its World Energy Outlook 2022.
Even natural gas, which was previously expected to continue rising, could now join coal and oil in peaking around 2030, according to the IEA's latest estimates.
By Tsvetana Paraskova for Oilprice.com
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Comments
My projection is based on the following realities:
1- There could be no post-oil era well into the future because there can be no alternative to oil as versatile and practicable as oil itself in the next 100 years.
2- There could be no peak oil demand either. While the introduction of EVs could slightly decelerate the rate of growth of oil demand, it will never arrest it. The reason is a world population projected to rise from the current 7.9 billion to 9.7 billion by 2050 and a global economy expected to grow from $91 trillion currently to $245 trillion by 2050.
3- The notion of total global energy transition is a myth. Even a partial transition could never succeed without major contributions of natural gas, nuclear energy and to some extent coal. Renewables can’t on their own satisfy the global demand for electricity because of their intermittent nature.
4- Also the notion of net-zero emissions is equally a myth. It will never be achieved in 2050 or 2100 or ever.
5- Despite the media hype almost on daily basis and the hundreds of billions of dollars spent on EVs during the last 25 year, there are only 16.5 million EVs on the roads worldwide compared to 2.0 billion ICEs. EVs will never prevail over ICEs.
6- And despite $6 trillion spent on renewables during the last decade, they have only managed to account for 5.7% of global primary energy consumption compared with 83% for fossil fuels.
Oil producers of the world should neither let themselves be influenced by the green policies of Western countries nor by the IEA’s on peak oil demand and energy transition. These policies are misguided and based on a flawed assumption that any new investments in oil and gas will end up as stranded assets by 2020. Far from it, OPEC+’s projects in its latest Annual World Oil Outlook that oil is expected to retain the largest share in the energy mix, accounting for almost a 29% share in 2045.
OPEC also revised upwards its short term and long term global oil demand. It now sees global oil demand rising by 2.7 million barrels a day (mbd) to 103.0 mbd in 2030 and reaching 108.3 mbd in 2030 and 109.8 mbd by 2045.
Moreover, the very last three barrels of oil will come from three regions: the Arab Gulf region of which UAE is a prominent figure, Venezuela’s Orinoco Belt and Russia’s Arctic.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert