The inequality of oil gas will change

Oil gas prices have generally recovered since the second quarter of last year, despite the COVID-19 outbreak. The rapid recovery of energy demand in the face of the epidemic has once again highlighted the difficulty of reducing global emissions wean mankind off fossil energy dependence.

Oil demand hit bottom forecast

Under the trend of accelerating the energy transition, the rapid development of electric vehicles their penetration into the energy sector will have a big impact on oil: oil demand will fall 70 per cent current levels in 2050, but natural gas demand will remain strong surpass oil by the early 2030s. To meet the projected drop in oil demand, 80 per cent of new vehicles sold would need to be electric hydrogen; Demand for non-fuel-based petrochemical materials, such as plastics, will also be hit by the push for recycling. The result will be a dramatic shift in consumption patterns in the transport petrochemical industries.

Oil demand will begin to decline in 2023 as climate action moves forward, then accelerate to a rate of 2 million b/d per year. Total liquid hydrocarbon demand of about 35 million b/d by 2050 would reduce carbon emissions oil by 60% current levels, equivalent to 30% of the total carbon reduction needed to achieve a warming of just two degrees Celsius.

The important position of natural gas in energy transformation

The bleak outlook for oil demand contrasts with gas demand, which will remain flat in 2050. One reason for this is that methane has a low carbon density; Large-scale CCS CCUS deployments in oil gas power generation are also supporting gas demand. In addition, if blue hydrogen is powerful, its application to natural gas is also an important reason for the demand for natural gas to remain unchanged.

Regionally, Asia's natural gas demand will rise rather than fall, largely because of its large presence of coal-fired power plants. The switch coal to gas will drive up demand in developing countries in Asia, coal power plants account for nearly 50 per cent. Asia's natural gas demand is forecast to grow at an average annual rate of 1.5 percent in 2050, offsetting a decline in demand in developed countries due to a shift natural gas to renewables.

The trend of oil gas prices

The huge divergence in the demand for oil gas due to climate change the energy transition also means that the two prices are moving in different directions. An irretrievable fall in demand for oil would doom prices forever.

In 2029, oil prices will start to fall, in 2030 Brent oil prices will be between $37 $42 per barrel. The high cost of oil resource countries is bound to exit the market, due to unsustainable strengths of low cost production of Saudi Arabia other Opec members, will be occupied in 2050 oil demand for half of the market, but even the market share for promotion of the country, for the building to pour oil, also no longer cause, a reduced to annual rate of 2 million barrels a day, Will make OPEC's production cuts never keep pace with falling demand.

But the fall in oil prices is only just beginning. After 2030, the industry will rely on assets that are already in production. By 2040, oil prices will fall to $28 - $32 / BBL. After 2040, oil prices will begin a free fall by 2050 they will fall to $10 - $18 / BBL.

Natural gas is the opposite. Natural gas, which used to be priced at the price of oil, finally seems poised to rise to the top. In North America, in particular, the shale gas revolution has caused gas prices to fall steadily over the past decade to less than 25% of the price of oil. Asia has fared slightly better, with LNG prices at about 80 percent of the oil price over the same period due to its growing reliance on imported LNG. Projections suggest that as oil demand falls prices fall, shale production in North America will also decline. This will have a knock-on effect on the production of cheap associated gas, which will require large quantities of expensive dry gas to meet gas demand. The Henley Center gas price is forecast to be $3 to $4 per million British thermal units by 2030. Strong gas demand in Asia will eventually drive many gas supply projects, including higher-priced LNG projects in the United States. By 2040, LNG prices will reach $8 to $9 per million British thermal units. Only after 2040 did the rise in global gas prices begin to ease as competition for supplies intensified due to the launch of gas projects.

But under Wood Mackenzie's baseline scenario, the gap between oil gas prices will remain persist until 2050, but will begin to narrow after oil demand peaks in the late 2030s. In the accelerated energy transition scenario, the roles of oil gas prices would be reversed, with Asian LNG prices exceeding oil prices after 2030 as gas demand exceeds oil demand. Asian gas prices could even be twice as high as oil prices after 2040. After 2040, however, North America's dependence on higher dry gas prices will increase, North American gas prices will reach parity with oil prices after 2040. Tighter carbon emissions requirements, carbon taxes, limits on sulphur nitrogen emissions are among the factors keeping prices on the rise.

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Source: International Gas Network