Page 6 - DMEA Week 20 2021

DMEA COMMENTARY DMEA

IEA calls for end to oil, IEA’s Fatih Birol

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

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