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IEA calls for end to

upstream investment

The IEA has adopted its hardest line yet against investment in
oil and gas production amid a global push for net-zero emission

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

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