Shell Warns 'Peak Oil Demand' Could Be Reached In 2021
A senior executive for Royal Dutch Shell claimed demand could reach its peak as early as 2021, which is much sooner than anticipated by other analysts.
“We’ve long been of the opinion that demand will peak before supply,” said Shell Chief Financial Officer Simon Henry, in a Tuesday conference call.
“And that peak may be somewhere between 5 and 15 years hence, and it will be driven by efficiency and substitution, more than offsetting the new demand for transport,” Henry added.
Other major oil providers have estimated that peak demand is farther down the line. Exxon Mobil in its annual outlook said “global demand for oil and other liquids is projected to rise by about 20 percent from 2014 to 2040.”
The government of Saudi Arabia claimed oil demand would continue to grow based on increasing consumption in emerging markets.
Meanwhile, the World Energy Council believes peak demand will arrive in 2030 should renewable energy and other technologies such as electric cars keep their fast level of growth. Yet Henry noted that Shell is in a prime position to adapt to the increased popularity of clean energy options.
“Even if oil demand declines, its replacements will be in products that we are very well placed to supply one way or the other, so we need to be the energy major of the 2050s,” Henry said.
“That underpins our strategic thinking. It’s part of the switch to gas, it’s part of what we do in biofuels, both now and in the future.”
Indeed, Shell will be one of seven international oil and gas firms including BP, Statoil, and Saudi Aramco that will collaborate in a renewable energy investment fund expected to be officially unveiled this Friday. The companies, which are also participants in the United Nations-backed Oil and Gas Climate Initiative, will also announce the next step of their plan to reduce the oil sector’s emissions.
Shell on Tuesday reported better-than-expected third-quarter profits of US$2.8 billion yet warned that the company’s outlook continues to be uncertain.