Demand for all kinds of energy is 'insatiable' as focus turns to storage ahead of winter: BP CEO

Demand for all kinds of energy around the world is "insatiable" as the industry in Europe, Russia and UK is focused on building storage ahead of what could be a particularly cold winter, BP CEO Bernard Looney said Oct. 21.

There are "questions around supply and demand in the market and of course when you start heading into the winter people begin to worry and then you have a degree of speculation entering the market,' Looney said at the India Energy Forum by CERAWeek.

"All forms of energy are being pulled hard at this moment in time. The real question is not about how it looks today because in general things are being supplied today. The question is what would it look like as we head into the winter months particularly in the north.'' Efforts to get storage levels "topped up" are occurring in Russia, Europe and the UK, he said.

Recent gains in energy prices, including natural gas in Europe, Asia and the US, are due to "particularly strong, strong demand in Asia on the back of the pandemic," Looney said, following a very cold winter in Europe that stretched into April and May this year, causing storage levels to drop, along with lower rainfall in Brazil which curbed hydropower output which pulled LNG into Latin America from the US and delayed plant maintenance including by BP because of COVID-19 brought forward into this year.

Dated Brent prices have more than doubled in the last year, with S&P Global Platts assessing the benchmark at $85.12/b on Oct. 20, while spot LNG prices have soared in recent months as Asia and Europe compete for cargoes. The JKM benchmark price reached an all-time high of $56.33/MMBtu in early-October. Gas, coal and renewables are leading the gains on a global basis, not oil, Looney said.

"What It means in the longer term is that we must invest into things like longer term contrasts, invest into natural gas which remains a great balancer in the system, invest into storage and invest into diversification," Looney said. "These are the investments necessary to give the energy system the redundancy that it needs, particularly as the system is becoming increasingly diversified in terms of how it is made up."

Hydrocarbons including natural gas are fundamental to BP's strategy, Looney said, predicting demand for hydrocarbons will remain for "decades to come." The company brought on 300,000 b/d of new hydrocarbon projects in the past year, he noted. Convenience and mobility is also core, along with renewables, where BP has doubled its pipeline to 21 GW in last 12 months while its offshore wind capacity went from zero to 3.7 GW. BP also has four hydrogen projects under evaluation, from nothing a year ago, he said.