Page 6 - NorthAmOil Week 20 2021

NorthAmOil COMMENTARY NorthAmOil

IEA calls for end to oil,

gas investment as world

strives for net zero

The IEA has adopted its hardest line yet against investment

in oil and gas production

GLOBAL THE International Energy Agency (IEA) has
taken its hardest line against oil and gas invest-
WHAT: ment yet, forecasting that if the world continues
A new report by the on a net-zero path, no further upstream projects
IEA concludes that are needed beyond those already approved.
no more upstream The Paris-based agency published its Net
projects are needed if Zero by 2050: a Roadmap for the Global Energy
the world embarks on a Sector report on May 18, concluding that the
path towards net-zero path towards carbon neutrality within three
emissions by 2050. decades was “narrow but still achievable.” How-
ever, it will entail dramatic contractions in oil,
WHY: gas and coal demand.
The report envisages In its Net-Zero Emissions by 2050 Scenario
dramatic contradictions (NZE), the IEA projects that coal use declines
in oil, gas and coal from 5.25bn tonnes in 2020 to a mere 2.5bn
demand over the coming tonnes in 2030 and just under 600mn tonnes in
decades. 2050. Oil consumption will never return to its
2019 peak, the agency estimates, shrinking from
WHAT NEXT: 88mn barrels per day in 2020 to 72mn bpd in
Most countries 2030 and 24mn bpd in 2050.
will not follow this “The trajectory of oil demand in the NZE
recommendation, means that no exploration for new resources is
and given the great required and, other than fields already approved
uncertainties in the for development, no new oilfields are neces-
outlook for many clean sary,” the IEA said. “However, continued invest- others are converting their facilities to produce
technologies, this might ment in existing sources of oil production [is] biofuels.
be prudent. needed.” “Refiners are used to coping with changing
The refining industry will also face consid- demand patterns, but the scale of the changes in
erable headwinds. “Refinery throughput drops the NZE would inevitably lead to refinery clo-
considerably and there are significantly changes sures, especially for refineries not able to con-
in product demand,” the report states. “With centrate primarily on petrochemical operations
rapid electrification of the vehicle fleet, there is or the production of biofuels,” the IEA said.
a major drop in demand for traditional refined Natural gas, which the IEA has previously
products such as gasoline and diesel, while hailed as a key transition fuel, will fare better
demand for non-combusted products such as than oil but will still see a significant contrac-
petrochemicals increases.” tion in demand. The IEA predicts consumption
While 55% of oil today is used to produce gas- will keep rising into the mid-2020s, but will then
oline and diesel, the share will fall to only 15% in shrink from a peak of 4.3 trillion cubic metres to
2050. Meanwhile, the amount used to produce 3.7 tcm in 2030 and 1.75 tcm in 2050, or 55% less
ethane, naphtha and LPG will grow from 20% than the level in 2020.
to nearly 60% in 2050. Many refiners are already “No new natural gas fields are needed in the
adjusting to this trend by shifting their product NZE beyond those already under development,”
slate more towards petrochemicals, while the IEA states. “Also not needed are many of the

P6 www. NEWSBASE .com Week 20 20•May•2021