Page 12 - FSUOGM Annual Review 2021

FSUOGM M AY FSUOGM

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

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