Western desire for green energy will not doom oil and gas industry

Name: Chinese scientists experiment with gaining limitless clean energy through fusion reactions
Uploaded: 2020-09-30T14:30:09.000Z
Duration: 1 min 3 s
Description: Chinese scientists experiment with gaining limitless clean energy through fusion reactions

BP and Shell’s plans for massive cuts to their oil and gas budgets amid a shift towards renewables have sparked worry among Middle East oil producers

Surging demand among developing countries for cheap, reliable energy sources such as oil, gas and coal will keep the industry afloat for decades to come

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Climate change activists demonstrate against BP outside the British Museum in London on February 8. Photo: Reuters

Tilak K. Doshi

Published: 10:30pm, 30 Sep 2020Updated: 11:40pm, 30 Sep 2020

The news these days for Middle East oil producers appears to be all bad. The coronavirus pandemic and collapse in global energy demand in the first quarter of 2020 led to plunging oil prices. Despite April’s historic OPEC+ deal to slash output by an unprecedented 9.7 million barrels per day (bpd), oil prices have been stuck around US$40 per barrel since June.

Prospects for an economic recovery for the Middle East already looked precarious after the fall in oil prices in mid-2014 as the US “shale revolution” took hold in global markets. They now look significantly worse than that of other emerging market regions.

In the midst of this calamity, BP made a bombshell announcement in early August that it intended to slash its oil and gas output by 40 per cent from 2019 levels by 2030 through managing its investment portfolio in favour of low-carbon renewable energy. BP – known for its influential annual global energy statistics reports – had released its 2020 energy outlook, which suggested oil demand may already have peaked in 2019.

The other European oil major, Royal Dutch Shell, then reported a similar 40 per cent planned cut to its oil and gas exploration and development budget to “prepare for the energy transition”.

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Chinese scientists experiment with gaining limitless clean energy through fusion reactions

BP’s outlook presented three scenarios – “business as usual”, a “rapid transition” towards a low-carbon renewable energy future and “net zero” carbon emissions by 2050. The last two have 2019 as marking peak global oil demand, falling from 100 million bpd to 30 million bpd by 2050.