The energy transition has reduced oil gas assets by 14 trillion

In a more New World doomsday scenario for the energy industry, the energy transition is putting up to $14 trillion worth of oil gas assets at risk, Reuters quoted Wood McKenzie as saying today.

In the short term, the future of oil gas looks good, the consultancy said. Demand for oil gas will rebound to even surpass pre-pandemic levels, reaching 160 million barrels of oil equivalent per day.

What's more, oil gas companies are getting leaner meander, will be able to generate cash flow at $60 a barrel this year, the same as Brent's $100 a barrel seven years ago.

In the long run, the picture starts to look different, with each energy transition scenario involving a decline in oil demand.

In the most optimistic scenario for oil gas, global demand will decline slowly gradually, reaching 90m b/d by 2050. This will encourage investment in new production oil prices will rise above $80 a barrel by 2030.

However, if the world decides to adopt the two-degree warming scenario, then oil demand could fall to 35 million b/d by 2050, with demand growth peaking in 2025. That means Brent crude prices will average $40 a barrel by 2030 then fall, according to the WoodMac report.

FraserMcKay, vice-president at WoodMackenzie, said that even under the more ambitious scenario, "the world will still need oil gas supplies for decades to come the industry will still be huge.

The report comes a day after the IEA called on the energy industry to immediately stop investing in new oil production so that the world can meet its Paris Agreement targets for 2050.

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Source: China Energy Network