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Where is the bloom period of petroleum industry?

  • The "demand peak" is far from coming. The economic, population growth, and other factors will drive global petroleum demand to continue to grow
  • The impact on demand for electric vehicles over the next 20 years is relatively limited
  • The oil industry will provide more energy than ever before, with fewer carbon emissions than ever before.

In the past three years, the oil industry has been carrying a load under four stresses of "oversupply, weak demand, harsh environmental protection, and rapid substitution". Many people conclude that the oil industry is on the verge of collapse. However global industry leaders have expressed optimism and confidence in the future of the industry. "It's far from the time of the revolution for the oil industry".

Confidence comes from rational research into the outlook for the oil demand. On the meeting on future demand for oil, the participants have formed three basic judgments: First, the factors such as economic growth, population growth will drive the global demand for oil continues to grow. But the growth will be slower. The growth areas are mainly concentrated in non-OECD countries of Asia, the Middle East, and Africa. The international energy agency (IEA), the organization of petroleum exporting countries (OPEC), and other agencies agree that: "Although people all over the world have been making efforts to slow climate change. By 2050, oil and other fossil fuels will remain a leading position in the global energy structure."

Second, by the early 2030s, oil and chemical industry will replace transportation as the first driving force to boost oil demand growth. The main part of the downstream development of industrial chain will shift from fuel production to the processing of chemical raw materials or other products, and the characteristics of the entire petroleum industry will be further shifted from "energy" to "basic raw materials".

Third, the impact of electric vehicles on oil demand in the next 20 years is relatively limited. The rapid development of electric vehicles is worthy of high attention, but the demand for electric cars currently replaces only 0.01% of global oil demand. In terms of transportation, electric vehicles can replace the short-distance passenger vehicles. But in the short run, it is difficult to realize the electrification of long-distance shipping, aviation, and heavy goods vehicles. Even if electric cars grow much faster than expected, they will only reduce oil demand by about 3 million barrels per day to 4 million barrels per day by 2035, accounting for about 3 percent of the total demand, according to BP research.

A deeper level of confidence comes from the initiative change that the oil industry has made to respond to challenges. In the age of low-carbon development, the oil industry is more clearly aware of its "dual mission". Chief executive officer of BP, Dai Deli, summed it up that to provide more energy than ever before, with fewer carbon emissions than ever before.

Oil companies are exploring a diverse path to carry out the low-carbon transition. On the one hand, expand renewable energy business; On the other hand, strive to develop the use of natural gas, combine it with renewable energy and provides the currently unguaranteed reliability of renewable energy. At the same time, the companies also have to constantly improve the energy efficiency. China's oil industry has been attaching great importance to increasing green low carbon energy production and strengthening the intensity of natural gas development. Natural gas production in 2016 accounts for almost 40% of total domestic oil and gas production, about 70% of the total supply of China's natural gas. Saudi Aramco is also moving forward with an ambitious new strategy to invest heavily in international gas production. Norway's national oil company said that low-carbon development will enable the company to possess more competitive advantages in the future. The current carbon emission of the company is 10 kg/barrels of oil equivalent, below the industry average of 17 kg/barrels of oil equivalent. Its goal is to drop to 8 kg/barrels of oil equivalent before the end of 2030.

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