The International Energy Agency and OPEC have been engaged in a verbal and statistical battle over the future of peak oil demand, which is essential to the survival of petroleum producers.
Peak oil demand is the moment when the world's demand for crude reaches its peak level. This is followed immediately by a steady fall. Theoretically, this would reduce the need for investments in crude oil projects and make them less cost-effective as alternative energy sources proliferate.
It is crucial for the survival of nations and businesses that produce oil.
That's why OPEC was incensed when the head of the International Energy Agency, an intergovernmental organisation that represents countries that consume oil, forecast that peak oil demand would be reached by 2030 and praised the decline of crude as a "welcome sight."
“Such narratives only set the global energy system up to fail spectacularly,” OPEC Secretary General Haitham al-Ghais said in a Sept. 14 statement. “It would lead to energy chaos on a potentially unprecedented scale, with dire consequences for economies and billions of people across the world.” He accused the agency of fear-mongering and risking the destabilization of the global economy.
More generally, the dispute highlights the persistent conflict between worries about climate change and the requirement for energy security. This year, ADIPEC, the annual convention formerly known as the Abu Dhabi International Petroleum Exhibition Conference, was quietly renamed to the Abu Dhabi International Progressive Energy Conference.
The United Arab Emirates, which will host the COP28 climate summit in November, has been promoting its environmental initiatives while increasing its capacity for crude production in anticipation of what it anticipates would be an increase in future demand. The third-largest oil producer in OPEC is the UAE.
Oil company CEOs and state oil producers emphasised the need for a dual strategy, saying that their enterprises were not the problem but rather part of the solution and that an energy transition was not conceivable without the hydrocarbons sector's security and financial support.
“I don’t know if we’re going to have peak oil in 2030. But it’s very dangerous to say that we have to reduce investment because that is against the transition,” Claudio Descalzi, CEO of Italian multinational energy company Eni, said Monday during a panel hosted by CNBC’s Steve Sedgwick.
He stated that the economy will suffer if oil investment, and thus supply, declines and cannot keep up with demand.
Although Descalzi admitted that using fossil fuels "is producing plenty of CO2," she noted, "we cannot shut down everything and rely only on renewables and that is the future. That is not how it is. We still have demand, we have investment that needs to be recovered, and we have infrastructure.
In its report released in August 2023, the IEA stated that "world oil demand is scaling record highs" and is expected to rise this year. However, it also stated that increased adoption of renewable energy and electric vehicles, as well as the West's decoupling from Russian gas, will speed peak demand before 2030.
“Based on current government policies and market trends, global oil demand will rise by 6% between 2022 and 2028 to reach 105.7 million barrels per day (mb/d) … Despite this cumulative increase, annual demand growth is expected to shrivel from 2.4 mb/d this year to just 0.4 mb/d in 2028, putting a peak in demand in sight,” the agency wrote in a June 2023 report.
The IEA also provided a roadmap for achieving Net Zero by 2050, estimating that the world's daily oil consumption must drop to 24 million barrels by 2050 from 77 million barrels now.
But when put into practical terms, those numbers are astounding: during the Covid-19 pandemic's most severe global lockdown period in March and April of 2020, daily oil demand worldwide was reduced by 20%. This was only possible because the economy came to a virtual stop. According to the IEA's roadmap, the daily oil demand will be reduced by 25% in seven years.
Meanwhile, OPEC leaders emphasise that oil consumption is continue to rise annually, especially from significant growing economies like China and India.
However, climate scientists caution that such a task should not deflect attention away from the severe harm that will result from inaction. According to the U.N. Intergovernmental Panel on Climate Change, if global warming is to be kept to 1.5 degrees Celsius above pre-industrial levels, fossil fuel emissions must be cut in half during the next ten years. And the panel estimates that heavy industries and fossil fuels are responsible for almost 90% of the world's CO2 emissions.
As a result, despite some requests from the hydrocarbons industry that they cooperate, the conflict between those who support climate action and those who oppose it continues. Following record annual earnings, oil firms have also been accused of reducing their climate commitments in recent months.
OPEC's al-Ghais attempted to moderate his response to the IEA's most recent prediction numbers when speaking to CNBC.
“We respect the IEA fully, of course,” he said Monday. “What we believe in is that we cannot just replace the energy system that has existed for so many years, over a decade or even two. And that’s why we continue to emphasize the importance of investing in oil, as well as investing in renewable energy, hydrogen.”
“And the important thing is the technologies,” al-Ghais added, “because ultimately, we all strive for the same thing, which is meeting the Paris Agreement objectives” of limiting the Earth’s temperature increase to 1.5 degrees Celsius.
When world leaders gather in the UAE in November for COP28 and release a united communique on climate action, that desire is going to be put to the test.
(Source:www.headtopics.com)
Peak oil demand is the moment when the world's demand for crude reaches its peak level. This is followed immediately by a steady fall. Theoretically, this would reduce the need for investments in crude oil projects and make them less cost-effective as alternative energy sources proliferate.
It is crucial for the survival of nations and businesses that produce oil.
That's why OPEC was incensed when the head of the International Energy Agency, an intergovernmental organisation that represents countries that consume oil, forecast that peak oil demand would be reached by 2030 and praised the decline of crude as a "welcome sight."
“Such narratives only set the global energy system up to fail spectacularly,” OPEC Secretary General Haitham al-Ghais said in a Sept. 14 statement. “It would lead to energy chaos on a potentially unprecedented scale, with dire consequences for economies and billions of people across the world.” He accused the agency of fear-mongering and risking the destabilization of the global economy.
More generally, the dispute highlights the persistent conflict between worries about climate change and the requirement for energy security. This year, ADIPEC, the annual convention formerly known as the Abu Dhabi International Petroleum Exhibition Conference, was quietly renamed to the Abu Dhabi International Progressive Energy Conference.
The United Arab Emirates, which will host the COP28 climate summit in November, has been promoting its environmental initiatives while increasing its capacity for crude production in anticipation of what it anticipates would be an increase in future demand. The third-largest oil producer in OPEC is the UAE.
Oil company CEOs and state oil producers emphasised the need for a dual strategy, saying that their enterprises were not the problem but rather part of the solution and that an energy transition was not conceivable without the hydrocarbons sector's security and financial support.
“I don’t know if we’re going to have peak oil in 2030. But it’s very dangerous to say that we have to reduce investment because that is against the transition,” Claudio Descalzi, CEO of Italian multinational energy company Eni, said Monday during a panel hosted by CNBC’s Steve Sedgwick.
He stated that the economy will suffer if oil investment, and thus supply, declines and cannot keep up with demand.
Although Descalzi admitted that using fossil fuels "is producing plenty of CO2," she noted, "we cannot shut down everything and rely only on renewables and that is the future. That is not how it is. We still have demand, we have investment that needs to be recovered, and we have infrastructure.
In its report released in August 2023, the IEA stated that "world oil demand is scaling record highs" and is expected to rise this year. However, it also stated that increased adoption of renewable energy and electric vehicles, as well as the West's decoupling from Russian gas, will speed peak demand before 2030.
“Based on current government policies and market trends, global oil demand will rise by 6% between 2022 and 2028 to reach 105.7 million barrels per day (mb/d) … Despite this cumulative increase, annual demand growth is expected to shrivel from 2.4 mb/d this year to just 0.4 mb/d in 2028, putting a peak in demand in sight,” the agency wrote in a June 2023 report.
The IEA also provided a roadmap for achieving Net Zero by 2050, estimating that the world's daily oil consumption must drop to 24 million barrels by 2050 from 77 million barrels now.
But when put into practical terms, those numbers are astounding: during the Covid-19 pandemic's most severe global lockdown period in March and April of 2020, daily oil demand worldwide was reduced by 20%. This was only possible because the economy came to a virtual stop. According to the IEA's roadmap, the daily oil demand will be reduced by 25% in seven years.
Meanwhile, OPEC leaders emphasise that oil consumption is continue to rise annually, especially from significant growing economies like China and India.
However, climate scientists caution that such a task should not deflect attention away from the severe harm that will result from inaction. According to the U.N. Intergovernmental Panel on Climate Change, if global warming is to be kept to 1.5 degrees Celsius above pre-industrial levels, fossil fuel emissions must be cut in half during the next ten years. And the panel estimates that heavy industries and fossil fuels are responsible for almost 90% of the world's CO2 emissions.
As a result, despite some requests from the hydrocarbons industry that they cooperate, the conflict between those who support climate action and those who oppose it continues. Following record annual earnings, oil firms have also been accused of reducing their climate commitments in recent months.
OPEC's al-Ghais attempted to moderate his response to the IEA's most recent prediction numbers when speaking to CNBC.
“We respect the IEA fully, of course,” he said Monday. “What we believe in is that we cannot just replace the energy system that has existed for so many years, over a decade or even two. And that’s why we continue to emphasize the importance of investing in oil, as well as investing in renewable energy, hydrogen.”
“And the important thing is the technologies,” al-Ghais added, “because ultimately, we all strive for the same thing, which is meeting the Paris Agreement objectives” of limiting the Earth’s temperature increase to 1.5 degrees Celsius.
When world leaders gather in the UAE in November for COP28 and release a united communique on climate action, that desire is going to be put to the test.
(Source:www.headtopics.com)