Page 6 - LatAmOil Week 42

LatAmOil COMMENTARY LatAmOil

IEA dismisses near-term peak in oil

demand, sees firm outlook for gas

KEY TAKEAWAYS THE International Energy Agency (IEA) has markets,” the IEA said, thanks to its competitive
warned of the unprecedented difficulty in fore- costs. Overall renewables will overtake coal in
Oil demand will recover casting the future of energy in its latest outlook usage by 2025.
to pre-pandemic report, after what it described as the biggest dis- As in previous outlooks, the IEA has set
levels by 2023 or 2027, ruption to demand since the World Wars and out its forecasts in a Stated Policies Scenario
depending on the pace the Great Depression. This uncertainty largely (STEPS), which reflects today’s announced
of the global economic centres around how quickly the global economy policy intentions and targets, and a Sustainable
recovery. will recover from the coronavirus (COVID-19) Development Scenario (SDS), which assumes a
pandemic, but also shifting policies as countries surge in clean energy policies and investments
Without a significant
shift in policies, it is look to bring down their emissions. The Par- that puts the world on track to meet the goals of
too early to foresee is-based agency has nevertheless drawn several the Paris Agreement. But this year the agency
a rapid decline in oil key conclusions. has also included a Delayed Recovery Sce-
consumption. In its 2020 World Energy Outlook, published nario (DRS). This is based on the same policy
last week, the agency forecasted that oil demand assumptions as in STEPS, but projects a much
Gas consumption was would regain its pre-pandemic level sometime slower recovery from the pandemic, with the
less affected by the in the 2020s, with the exact timing depend- global economy only returning to its pre-crisis
crisis and will therefore ing greatly on the pace of the post-COVID-19 size in 2023. In addition, the IEA has published
recover sooner. recovery. The IEA has long resisted predictions a Net Zero Emissions by 2050 case, which sets
that peak oil demand is imminent, and its latest out what the world would need to do by 2030 to
Gas will retain its
current share in the outlook is no exception, forecasting that con- reach net-zero emissions in three decades’ time.
global energy mix even sumption would remain flat or see modest gains
if most countries align during the 2030s. Oil
their policies fully with Gas consumption, which has fared better Global energy demand is set to fall by 5% in
the Paris Agreement. than oil and coal during the pandemic, will 2020, the IEA predicts. Oil takes the hardest hit
return to pre-crisis levels much sooner. Demand out of the main fuels, with demand contract-
Some $70bn in gas will continue to grow over the coming decades, ing by 8%. However, the IEA’s report was more
infrastructure invest- as the fuel retains its role as the main provider of bullish on oil than other recent outlooks such as
ment will be needed stable power supply. BP’s, which warned that peak oil demand would
each year to support Meanwhile, the IEA called time on coal, pre- occur within a few years, or may never regain its
growth in Asian demand.
dicting that consumption would be unlikely to pre-pandemic level.
return to pre-pandemic levels and that by 2040, In both STEPS and DRS, demand flattens out
its share of the energy mix will shrink to under in the 2030s. But a prolonged economic down-
20% for the first time since the industrial rev- turn will mean that consumption will be 4mn
olution. Solar power, on the other hand, will barrels per day (bpd) lower than in STEPS, keep-
become the “new king of the world’s electricity ing it below 100mn bpd.

P6 www. NEWSBASE .com Week 42 22•October•2020