Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.

  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list

Oil investment under threat as demand uncertainties loom

Energy | Natural Gas | Natural Gas (European) | Oil | Metals | Steel | Shipping

Market Movers Europe, July 15-19: Oil and distillates markets watch out for geopolitical risks


Platts Rigs and Drilling Analytical Report (RADAR)

Oil | Refined Products | Fuel Oil | Shipping | Dry Freight | Marine Fuels | Tankers

Mediterranean Bunker Fuel Conference, 8th Annual

Natural Gas | Natural Gas (North American) | Oil | Crude Oil

Más de la mitad de la producción de gas y petróleo del golfo de EE. UU. sigue cerrada tras el huracán Barry: BSEE

Oil investment under threat as demand uncertainties loom


The global oil industry may be underestimating the pace of world'scurrent transition away from fossil fuels to cleaner energy, with theprospect of peak oil demand in the coming decades already informingupstream investment decisions at some producers, a major industry eventheard Tuesday.

Not registered?

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

Register Now

* BHP seeks oil project payback 'well before' 2030

* Oil companies 'underestimating' renewables boom: Gunvor

* Trafigura less concerned over pace of EV impact

Although global oil demand will continue to grow in the medium term,driven by economic expansion in developing countries, an expecteddrop-off in oil demand growth from around late 2030 means Australianmining giant and oil producer BHP, for one, is avoiding any long-term oilprojects, its CEO Andrew Mackenzie said.

"There have to be some questions on electrification as to what that willdo to demand for oil from 2030-40 onwards," Mackenzie told the FTCommodities Global Summit in Lausanne, Switzerland.

"Certainly when we look at investment on oil, we want to have ones thatpay back well before that period, when I think we're in slightlydangerous waters."

BP last month became the first Western supermajor to pinpoint aninflection point in the world's need for oil, estimating that surgingwind and solar power, electric cars, more frugal vehicles could see oildemand peaking in the "late 2030."

BP's main long-term outlook scenario now sees oil demand topping out at110,000 b/d, up from about 97,000 b/d currently. A year ago it expectedoil demand to rise beyond 2040.

ExxonMobil, however, remains more bullish on the future for oil,predicting that demand for oil will likely continue to grow by 19% to 117million b/d to 2040.


Others are less concerned about the peak of oil demand and InternationalEnergy Agency still believes oil demand will continue to rise through2040.

Oil trader Gunvor's CEO, Torbjorn Tornqvist, said he is also concernedthat an accelerating push to electric cars and growth of new greentechnologies could spell the end of global oil growth sooner than manyexpect.

"I think that generally the oil industry has underestimated thechallenges ahead. I think that electric vehicles are just the beginning,the advances create momentum which feeds that's momentum and acceleratesit," Tornqvist told the event.

He said, however, that he sees global oil consumption continuing to growfor at least the coming 10 years, noting that he saw the penetrationrates of renewables energies more dependent on regulatory issues ratherthan simple economics.

Tornqvist's concerns about a faster-than-expected impact on oil demandfrom EVs were largely born out out by Standard Chartered's Head ofCommodities Research, Paul Horsnell.

Horsnell said economists have been hiking their expectations of thenumber of EVs on roads in the coming decades to around 400 million by2030-35, a level that could make a more significant dent in OECD oildemand.

IBP last month almost doubled its estimates of electric cars on the roadby 2035 to nearly 190 million units, and said electric car sales areexpected to surge to reach around 320 million on the roads by 2040.


Trafigura, the world's third-largest oil trading house behind Vitol Groupand Glencore, is much less bullish over the impact on oil demand from thegrowing push to renewable, lower-carbon energy sources.

The oil trader sees continued growth in the oil markets at least until2035 and "maybe beyond," Trafigura's CEO Jeremy Weir told the event.

Weir said Trafigura is forecasting a growth of EVs globally to a total of40 million by 2030, up from 2-3 million units currently, a figure whichwould only demand oil demand by around 1 million b/d.

"From our point of view, it's not a big impact on the market place interms of oil," Weir said.

Despite an expected continue rise in future global gas demand as a clear,transition fuel to renewable energy sources, Mercuria's CEO Marco Dunandsaid he still expects EVs to help erode the market share for fossil fuelsin the near future.

Noting that fossil fuels currently represent about 81% of the globalenergy mix, largely unchanged from 30 years ago, Dunand said expects theshare for oil and gas in the global energy mix to fall to 70-55% ofenergy market in 15-20 years.

But the future for a smaller role for oil in the global energy mix is notall bad news for some commodity producers.

With booming growth in renewable sources of energy which feed into morewidespread global electrification of transport networks, however, morediversified commodity producers are likely to benefit, BHP's Mackenziesaid.

"Some people believe that renewable energy will reduce the world's totalcommodity demand. I disagree," Mackenzie said.

"China, the world's largest consumer of commodities is also on track tobecome the global leader in clean energy technology. And renewable energyinfrastructure will generate greater demand for commodities."

Greater demand for renewable source of power such as solar and wind wouldcreate higher demand for other commodities than for energy sourced fromfossil fuels, he said.

The growing push toward electrification of energy and transport networkswould mean rising demand for key conductors such as copper and batterycomponents such as cobalt and lithium.

--Robert Perkins,

--Edited by Jonathan Dart,