Page 7 - EurOil Week 38

EurOil COMMENTARY EurOil

sharp drop in industrial and conventional gas Asia, before falling back as these countries pivot
consumption, with it only being partly offset towards greener alternatives.
by using gas burn to produce blue hydrogen – Under the rapid scenario, BP projects that
which is extracted from natural gas while the LNG trade will bounce back strongly from the
displaced carbon from the process is captured impact of coronavirus (COVID-19), more than
and stored. doubling over the first half of the outlook from
But while BP itself is targeting net zero emis- 425bn cubic metres in 2018 to around 1.1 tcm by
sions from its operations by 2050, the net zero the mid-2030s. Thereafter LNG trade is antici-
scenario in its outlook requires a co-ordinated pated to decline, falling to around 970 bcm by
global effort, significant investment and high 2050. The most pronounced decline is expected
carbon prices, as well as meaningful changes to be seen in China.
to societal behaviour and preferences. Thus “The pace of this decline in LNG exports
it seems fair to assume that short of an event after the mid-2030s is greater than the speed of
that forces such dramatic – and long-lasting – depreciation of liquification facilities, implying
changes, the net zero scenario is less likely to play that towards the end of the outlook some facili-
out than the others. ties need to be operated at less than full capacity
BP envisions LNG helping to create a “more or shut down prematurely,” BP said.
competitive, globally integrated gas market”
under both the business-as-usual and rapid What next?
scenarios. BP noted that the scenarios it had outlined in its
In the business-as-usual case – which still outlook were not predictions of what is likely to
assumes change, albeit at the same pace it has happen, or indeed what the company wanted
previously occurred – LNG trade is projected to to happen, but rather an exploration of differ-
rise above 1 tcm by 2050. Even in this case, how- ent judgements and assumptions relating to the
ever, most of the growth is anticipated to take energy transition.
place in the nearer term, with the next 10 years “The scenarios are based on existing and
or so accounting for roughly 60% of it. developing technologies which are known
The US, Africa and the Middle East are pro- about today and do not consider the possibility
jected to be the main sources of incremental sup- of entirely new or unknown technologies emerg-
ply. Asia is anticipated to be the main market for ing,” the super-major added.
these rising exports, along with the EU, which It is worth noting that the outlook has been
BP said would remain an important balancing published during a highly unpredictable year.
market for LNG. This may serve as a timely reminder of how dif-
The same regions are predicted to be the ficult it is to make projections about the future
leading sources of supply and demand under – and it is thus not surprising that BP is seeking
the rapid scenario. However, under this scenario, not to present its scenarios as predictions.
LNG trade is anticipated to grow more rapidly Looking back instead of forward, it is not so
initially, before slowing significantly over the long ago that future scenarios revolved around
second half of the outlook period. peak supply. The fact that all of the scenarios set
This is because LNG imports are initially out in BP’s outlook feature peak demand instead
expected to play a significant role in coal-to-gas illustrates how much, and how unexpectedly,
switching across China, India and elsewhere in things have already changed. ™

Week 38 24•September•2020 www. NEWSBASE .com P7