Latest market news

BP's scenarios see more room for oil and gas to 2050

  • Market: Crude oil, Natural gas
  • 10/07/24

BP's latest scenarios for oil and gas demand to 2050 show that, whether the energy transition is speedy or slow, consumption will be higher at the mid-century stage than it previously thought.

This year's BP Energy Outlook, published today, focuses on two scenarios, both at the extreme of transition outcomes. The Current Trajectory scenario — which is not consistent with a 2°C carbon budget — places weight on climate policies already in force. The 'Paris-consistent' Net Zero scenario assumes there is a significant tightening in those policies.

BP's projection for global oil demand to 2050 under the Current Trajectory scenario, at 76.8mn b/d, is slightly greater than the estimate it made under a similar scenario in last year's outlook for 75mn b/d. Under the the same Net Zero scenario it employed last year, BP has significantly raised its oil demand estimate for 2050 to 28.2mn b/d, from 20mn b/d.

In the medium term, BP sees oil demand at 101.7mn b/d under both scenarios in 2025. Under the Current Trajectory scenario this will plateau in the latter part of this decade before falling to 97.8mn b/d by 2035. Under the Net Zero scenario, oil demand will fall more sharply to 94.7mn b/d by 2030 and then to 80.2mn b/d by 2035.

Long road ahead

BP said the single biggest driver reducing oil consumption will be declining use of oil in road transportation, as vehicle efficiency improves and alternative fuels are used more, led by the electrification of cars and trucks.

But some offsetting of this decline will occur "as rising prosperity boosts consumption of plastics, textiles and other oil-based materials," BP said.

Under the Current Trajectory scenario, oil use in road transport declines by 3.4mn b/d over the 2022-35 period and then by 15.5mn b/d between 2035-50. Under Net Zero, road transport consumption declines by 9.6mn b/d over 2022-35 and by 26mn b/d over 2035-50. Oil consumption for use in petrochemicals feedstocks increases in both scenarios through to 2035, adding 5.4mn b/d of demand in the Current Trajectory scenario and 3.5mn b/d of demand under Net Zero.

But there is a divergence after 2035 when the Current Trajectory scenario sees 1.5mn b/d going to feedstocks but the Net Zero scenario sees this falling by 5.6mn b/d. In the former scenario use of oil as a feedstock plateaus at around 25mn b/d in the 2040s, while in the latter scenario use of oil as a feedstock peaks in the 2030s.

Gas up

BP's Current Trajectory scenario has natural gas demand increasing from 3.96 trillion m³/yr in 2022 to 4.73 trillion m³/yr in 2050, slightly greater than the 4.62 trillion m³/yr estimate it had last year in its similar New Momentum scenario.

But as with its oil demand projections, the company's Net Zero scenario sees 1.80 trillion m³/yr of gas demand by mid-century against 1.66 trillion m³/yr previously. Even by 2035 the difference between the two scenarios when it comes to gas demand is stark, a gap of almost 850bn m³/yr or one-fifth of the potential demand by then.

The wide gap between scenario outcomes for gas — with gas demand growing by 19pc under the Current Trajectory projections and plummeting by 58pc under Net Zero by mid-century — reflects two significant opposing trends, BP said. The first is increasing demand in emerging economies as they grow and industrialise. The second is a shift away from natural gas to greater electrification and lower-carbon fuels. But the net effect of these depends on the speed of the energy transition.

Also underpinning BP's projections are trends common to both scenarios. One is that energy demand grows more strongly in emerging economies, driven by rising prosperity and living standards. Another is that the structure of this demand will change as fossil fuels are replaced by a growing share of low-carbon energy.

But despite oil demand declining between 2022-50 in either scenario, oil will continue to play "a significant role in the global energy system for the next 10-15 years" resulting in the need to continue investing in the oil and gas upstream, BP said.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

Williams to resume Louisiana gas line construction


19/07/24
News
19/07/24

Williams to resume Louisiana gas line construction

New York, 19 July (Argus) — US natural gas pipeline company Williams on Friday told federal energy regulators it will proceed with construction of its delayed 1.8 Bcf/d (51mn m³/d) Louisiana Energy Gateway (LEG) gas gathering line in Louisiana. Williams' letter of intent to the US Federal Energy Regulatory Commission (FERC) is the culmination of a series of lawsuits across multiple Louisiana parishes brought by US midstream rival Energy Transfer, which seeks to stop Williams and two other pipeline companies from crossing its own gas line in the Haynesville shale. While Williams is still waiting on a final ruling over two crossings in Vernon Parish, its recent legal victories over Energy Transfer and acquisition of necessary federal permits and easements from landowners have made it possible to commence construction of LEG, Williams said. The final ruling out of Vernon Parish will be decided "soon," Williams said. Williams said it intends to release its contractor to resume pre-construction activities along its right-of-way as early as 25 July, then proceed with construction. "But for the crossing litigation with Energy Transfer, construction of [LEG] would be well underway," Williams said. The litigation has pushed Williams' expected in-service date for LEG from late 2024 to the second half of 2025. Williams prevailed over Energy Transfer earlier this month in DeSoto Parish and in early June in Beauregard Parish . By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

New Libyan firm starts exporting crude


19/07/24
News
19/07/24

New Libyan firm starts exporting crude

State-owned NOC subsidiary Agoco appears to be paying for work at its fields with crude, writes Aydin Calik London, 19 July (Argus) — A little-known Libyan firm has begun exporting crude, according to sources, official documents and ship-tracking data seen by Argus . Arkenu Oil, which describes itself as a private oil and gas development and production firm, exported 1mn bl of Sarir/Mesla from the port of Marsa el-Hariga on 10 July on the Zeus, a Suexmax . Shipping agent and port reports list Chinese trading firm Unipec as the charterer. The Zeus' bill of lading lists Libyan state-owned NOC as the sender of the consignment on behalf of Arkenu. Libyan crude sales have historically been the preserve of NOC and a handful of international oil firms that hold stakes in the country's upstream, including Italy's Eni, TotalEnergies and Austria's OMV. Turkey-based commodities trader BGN, which does not have upstream production in Libya, also regularly appears on loading programmes as a seller of the country's crude. According to a document dated 10 July, NOC allocated to Arkenu an unspecified share of production from its subsidiary Agoco's Sarir and Mesla fields in return for Arkenu carrying out development work at the sites. This implies that Agoco is paying Arkenu for the work in crude. Arkenu's 1mn bl cargo is worth around $84mn at prevailing market rates, Argus estimates. Arkenu, set up in early 2023 in the eastern city of Benghazi, says it owns modern drilling rigs and has a team of experts "who have held high positions in major oil production and development companies". It is unclear what work Arkenu has carried out for Agoco. Sarir and Mesla accounted for most of Agoco's roughly 280,000 b/d of output in 2023. Libya is politically divided between an internationally recognised administration in the west, which has historically controlled oil revenues, and a rival administration in the east, which is home to around three-quarters of the country's production capacity. Agoco is based in the east, and NOC in the west. Arkenu, NOC and Unipec have been contacted for comment. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Von der Leyen faces new Green Deal challenges


19/07/24
News
19/07/24

Von der Leyen faces new Green Deal challenges

The president promises a ‘clean industrial deal', but will need to make compromises over climate policy, writes Dafydd ab Iago Brussels, 19 July (Argus) — Ursula von der Leyen's re-election by the European Parliament as president of the European Commission on 18 July promises to see a doubling down on climate and energy policy, with her 2024-29 mandate stipulating greenhouse gas (GHG) emissions cuts of at least 90pc by 2040 compared with 1990. "I have not forgotten how [Russian president Vladimir] Putin blackmailed us by cutting us off from Russian fossil fuels. We invested massively in homegrown cheap renewables and this enabled us to break free from dirty Russian fossil fuels," von der Leyen says, promising to end the "era of dependency on Russian fossil fuels". She has not given an end date for this, nor specified if this includes a commitment to ending Russian LNG imports. Von der Leyen went on to detail political guidelines for 2024-29. She has pledged to propose a "clean industrial deal" in the first 100 days of her new mandate, albeit without giving concrete figures about how much investment this would channel to infrastructure and industry, particularly for energy-intensive sectors. The clean industrial deal will help bring down energy bills, she says. Von der Leyen told parliament that the commission would propose legislation, under the European Climate Law, establishing a 90pc emissions-reduction target for 2040. Her political guidelines also call for scaling up and prioritising investment in clean technologies, including grid infrastructure, storage capacity, transport for captured CO2, energy efficiency, power digitalisation and a hydrogen network. She plans to extend aggregate demand mechanisms beyond gas to include hydrogen and critical raw materials, and notes the dangers of dependencies and fraying supply chains — from Putin's energy blackmail to China's monopoly on battery and chip raw materials. Majority report Passing the necessary legislation to implement her stated policies will now require approval from EU states and parliament. Unless amplified by Germany's election next year, election victories by far-right parties in France and elsewhere appear not to threaten EU state majorities for specific legislation. Parliament's political centre-left S&D and liberal Renew groups, as well as von der Leyen's own centre-right European People's Party (EPP), have elaborated key policy requests. These broadly call for the continuation of the European Green Deal — a set of legislation and policy measures aimed at 55pc GHG emissions reductions by 2030 compared with 1990. A symbolic issue for von der Leyen to decide on — or compromise on — is that of internal combustion engine (ICE) vehicles. EPP wants to stick to technological neutrality and revise the current mandate for sales of new ICE cars to be phased out by 2035, if they cannot run exclusively on carbon-neutral fuels. The EPP wants an e-fuel, biofuel and low-carbon fuel strategy. Von der Leyen's guidelines reflect the need to gain support from centre-right, centre-left and greens. She says the 2035 climate neutrality target for new cars creates investor and manufacturer "predictability" but requires a "technology-neutral approach, in which e-fuels have a role to play". She has not mentioned carbon-neutral biofuels. It will be impossible for von der Leyen to satisfy all demands in her second mandate. This includes policy requests put forward by the EPP, ranging from a "pragmatic" definition of low-carbon hydrogen and market rules for carbon capture and storage, to postponing the EU's deforestation regulation. EU member states are expected to propose their candidates for commissioners in August, including for energy, climate and trade policy, with von der Leyen's new commission subject to a final vote in parliament in late October. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Trump vows to target 'green' spending, EV rules


19/07/24
News
19/07/24

Trump vows to target 'green' spending, EV rules

Washington, 19 July (Argus) — Former president Donald Trump promised to redirect US green energy spending to other projects, throw out electric vehicle (EV) rules and increase drilling, in a speech Thursday night formally accepting the Republican presidential nomination. Trump's acceptance speech, delivered at the Republican National Convention, offered the clearest hints yet at his potential plans for dismantling the Inflation Reduction Act and the 2021 bipartisan infrastructure law. Without explicitly naming the two laws, Trump said he would claw back unspent funds for the "Green New Scam," a shorthand he has used in the past to criticize spending on wind, solar, EVs, energy infrastructure and climate resilience. "All of the trillions of dollars that are sitting there not yet spent, we will redirect that money for important projects like roads, bridges, dams, and we will not allow it to be spent on the meaningless Green New Scam ideas," Trump said during the final night of the convention in Milwaukee, Wisconsin. Trump and his campaign have yet to clearly detail their plans for the two laws, which collectively provide hundreds of billions of dollars worth of federal tax credits and direct spending for renewable energy, EVs, clean hydrogen, carbon capture, sustainable aviation fuel, biofuels, nuclear and advanced manufacturing. Repealing those programs outright could be politically difficult because a majority of spending from the two laws have flowed to districts represented by Republican lawmakers. The speech was Trump's first public remarks since he was grazed by a bullet in an assassination attempt on 13 July. Trump used the shooting to call for the country to unite, but he repeatedly slipped back into the divisive rhetoric of his campaign and his grievances against President Joe Biden, who he claimed was the worst president in US history. Trump vowed to "end the electric vehicle mandate" on the first day of his administration, in an apparent reference to tailpipe rules that are expected to result in about 54pc of new cars and trucks sales being battery-only EVs by model year 2032. Trump also said that unless automakers put their manufacturing facilities in the US, he would put tariffs of 100-200pc on imported vehicles. To tackle inflation, Trump said he would bring down interest rates, which are controlled by the US Federal Reserve, an agency that historically acts independently from the White House. Trump also said he would bring down prices for energy through a policy of "drill, baby, drill" and cutting regulations. Trump also vowed to pursue tax cuts, tariffs and the "largest deportation in history," all of which independent economists say would add to inflation. The Republican convention unfolded as Biden, who is isolating after testing positive for Covid-19, faces a growing chorus of top Democratic lawmakers pressuring him to drop out of the presidential race. Democrats plan to select their presidential nominee during an early virtual roll-call vote or at the Democratic National Convention on 19-22 August. By Chris Knigh t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more