Page 6 - NorthAmOil Week 08 2023

NorthAmOil COMMENTARY NorthAmOil

BP predicts faster decline

in oil and gas demand

BP is forecasting a faster decline in oil and gas demand in a break

from the past

GLOBAL BP released its flagship annual report, Energy present trends. First, it notes that the global
Outlook, at the end of January, forecasting an carbon budget is running out, and that despite
WHAT: accelerated decline in oil and gas consumption all efforts made by governments and compa-
BP has released its as a result of fallout from the Russia-Ukraine war nies so far, CO2 has continued to rise every
flagship Energy Outlook and the impact of the broader energy crisis. year since the Paris Agreement was reached in
report. In light of soaring global oil and gas prices, 2015, with the exception of 2020, when corona-
caused in part by Moscow’s invasion of Ukraine virus (COVID-19) restrictions caused energy
WHY: and the subsequent severing of energy ties demand to tank.
The UK major sets out between Russia and the EU, countries will pur- Second, BP notes that the Russia-Ukraine
one scenario based sue greater energy security over the next decade, war is having long-lasting implications for the
on current trends and and this will result in a faster decline in global oil global energy system, and is causing the pace
existing policies, and and gas demand, BP said. At the same time, the of the energy transition to accelerate. Third, the
two more based on UK major predicts an accelerated shift towards importance of fossil fuels is declining as renew-
predetermined climate renewable energy – in part because of high oil ables expand their share and electrification is
goals. and gas prices, and in part because of hydro- increased.
carbon importers developing more domestic Oil demand will decline over the period of the
WHAT NEXT: energy supply. And this will mean that global outlook, BP notes, as its use in road transport
The company has emissions reduce more quickly, BP said. declines in favour of electrification, and vehi-
stressed the need for an BP outlines three scenarios in its outlook. cles become more efficient. The outlook for nat-
orderly transition from oil The first two – Accelerated and Net Zero – are ural gas will depend on the pace of the energy
and gas to avoid future broadly in line with IPCCs scenarios that are transition and how demand grows in emerging
crises. consistent with Paris Agreement goals. These economies.
scenarios envisage the substantial cut in carbon BP warns that the current energy crisis
emissions – 75% in Accelerated and more than demonstrates that the transition away from
95% in Net Zero. Net Zero will also involve a oil and gas should be orderly, so that supply
shift in societal behaviour and preferences to declines in line with demand and not at a faster
support increased energy efficiency and the rate. Upstream investment must continue over The outlook
greater adoption of low-carbon technologies. the next three decades to offset natural decline at
This is to say that they are scenarios based on already-developed fields, the company stresses. for natural gas
predetermined outcomes. The decarbonisation of the global power sys- will depend on
BP’s third scenario, New Momentum, fore- tem will be driven by the greater deployment
casts the current trajectory of the global energy of wind and solar power, BP notes, and both the pace of the
system, based on current trends and known pol- low-carbon hydrogen and carbon capture uti-
icy directions. It stresses “the marked increase lisation and storage (CCUS) will play critical energy transition
in global ambition for decarbonisation in recent roles in decarbonising hard-to-abate industries,
years, as well as on the manner and speed of according to the company. and how
decarbonisation seen over the recent past.” demand grows
The UK cautions that “the scenarios are not A break from the past
predictions of what is likely to happen or what In contrast with its previous outlooks, all three of in emerging
BP would like to happen.” Furthermore, it states BP’s scenarios now envisage final energy peaking
that “the many uncertainties surrounding the within the next three decades, owing to energy economies.
transition of the global energy system mean efficiency gains. But as was the case in previous
that the probability of any one of these scenar- reports, BP warns that in the New Momentum
ios materialising exactly as described is negligi- scenario, the world is lagging far behind the nec-
ble.” Nevertheless, the outlook provides useful essary course to reach net zero by 2050. In New
insight on how global energy trends may play Momentum, global carbon emissions will only
out over the next three decades. be around 30% lower than the level they were
BP bases all three scenarios on a number of at in 2019. Electrification will drive emissions

P6 www. NEWSBASE .com Week 08 23•February•2023