Page 6 - LatAmOil Week 08 2023
P. 6

LatAmOil                                      COMMENTARY                                            LatAmOil


       BP predicts faster decline





       in demand for oil and gas







       Fallout from Russia-Ukraine war and broader energy crisis seen affecting demand




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



       P6                                      www. NEWSBASE .com                    Week 08   22•February•2023
   1   2   3   4   5   6   7   8   9   10   11