At the inaugural Energy Asia conference, industry leaders remarked that oil and gas will continue to be key energy sources for many years in the future. The CEO of Hess Corporation said, "Energy transition is going to take a lot more time, be much more expensive and require new technologies that are yet to be invented."
At the Energy Asia conference in Kuala Lumpur this week, executives from major oil and gas firms argued that oil and gas will remain major sources of energy for many years to come, given the lag in the energy transition. "The takeaway from this gathering should be that oil and gas are required for a long time," said John Hess, the CEO of Hess Corporation. He further contended that energy transition is a process that will take much longer than expected, and will require more money and advancements in technology that have yet to be developed. He added that for the world to make progress in clean energy, $4 trillion would have to be invested annually, a figure that is far off the current mark of $1.7 trillion projected by the International Energy Agency for 2023.
Hess stated that oil and gas are essential to global economic competitiveness, as well as an accessibly priced and dependable energy transformation. He forecasted that oil market conditions will improve during the second half of the year when production reaches 1.2 million barrels per day by 2027. He further expressed that the most considerable challenge the world is facing is a lack of investment in the sector. "There is a structural deficiency in energy supply, in oil and gas, and in renewable energy," he said. Also, at the opening speech of the conference, OPEC's Secretary General expected that worldwide oil demand will increase to 110 million barrels daily by 2045, due to rapid urbanization in the upcoming years, as mentioned by Haitham Al Ghais.
On Tuesday through an e-mail exchange, ExxonMobil, the biggest oil producer in the U.S., expressed their expectation that oil will be the largest source of energy for the next two decades. Erin McGrath, the Senior Advisor for Public and Government Affairs from ExxonMobil, declared to CNBC that even in 2050, liquids will remain the foremost form of energy, with a 15 million barrel per day rise in demand seen in the developing countries of Asia, Europe, the Middle East, and Latin America beyond 2025.
Asia is predicted to outpace the U.S. and Europe in energy demand by the end of the year. Dan Yergin, Vice Chairman of S&P Global, noted that Southeast Asia's population is 50% larger than the EU's. According to Patrick Pouyanne, CEO of TotalEnergies, LNG markets saw their largest growth in China, India, Korea, Japan and Vietnam in 2020. Pouyanne further emphasized that Asia is the region driving the future of energy, due to its 5 billion people striving for a better quality of life.
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A.S. Sahney from Indian Oil Corporation declared that India is likely to be amongst the few nations to raise its refining capacities by 20% over the next few years. He remarked that this signified their faith in the endurance of fuel, even though transition to the new energy sources is happening. Nevertheless, the projections for energy utilization in India have necessitated the setting up of new refineries. The IEA predicts that India would have the highest boost in energy utilization with a growth of more than 3% till it becomes the most populous country in the world by 2025. Similarly, Aramco, the state-owned oil corporation from Saudi Arabia, is confident that China and India will be the primary engines of oil demand growth, adding over two million barrels daily for the rest of 2020. Amin Nasser, the CEO of Aramco, also expressed his faith that when the global economy starts to revive, the supply-demand equilibrium in the oil industry would get tighter.
Vitol, a commodities trading firm, has projected a less optimistic outlook for crude demand than that of the International Energy Agency (IEA), expecting a peak in 2030 - two years later than the IEA's prediction. During a panel discussion, Vitol CEO Russell Hardy stated that demand should slowly decrease until 2040, with a more dramatic decline following due to the increasing prevalence of electric vehicles and the energy transition. Despite favourable fundamentals for the industry in the short-term, the situation is complicated by Russia's sustained oil output and sluggish growth in China, making it difficult to predict where prices will go.
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"Hardy noted that the supply side is somewhat exaggerated, particularly in Russia, with many anticipating significant output reductions due to sanctions making it harder to bring oil to market. He added that China's efforts to rebound in the face of global economic difficulties have not been quite as effective as hoped, leaving their demand for oil below projections. Additionally, Europe and the U.S. have about one and a half million barrels less demand than 2019, as more people transition to renewables in Europe and Asia. According to him, this reduced demand is 'an age-old problem'."
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