Huge oil and gas investments, big efficiency gains and practical use of renewables are all needed to meet rapidly rising energy demand over the next few decades, the heads of the world's largest oil companies said on Tuesday.
Despite concerns over energy demand because of the euro zone debt crisis, the chief executives of the biggest oil and gas companies told the World Petroleum Congress they must continue investing trillions of dollars to deliver energy in the longer term and called on governments to help. "In the current economic climate the need to make the right policy choices is critical," said Rex Tillerson, chief executive of ExxonMobil, the world's biggest publically traded energy company. "We must engage in long-term planning, undeterred by the episodic ups and downs of regional and global economic performance," he added.
BP CEO Bob Dudley said that, with world energy demand projected to increase by up to 40 percent by 2030, enhanced oil recovery from old fields as well as new finds from under the Arctic ice and from the deepest waters of the world's oceans will all be needed. "The numbers are stark ... That is the equivalent of adding another China and another United States to demand. And our latest data show that demand profile is holding up even at this time of economic uncertainty," he said.
Although BP expects oil to lose market share to gas over the next few decades, it still expects oil demand to keep rising from roughly 85 million barrels per day today to over 100 million bpd by 2030. "Since existing fields are declining and will only yield just over 50 million barrels by 2030, our industry needs to add roughly a Saudi Arabia's worth of extra production capacity every five years," Dudley said.
Tillerson said that global energy demand would be more than 30 percent higher in 2040 than today and added that without expected efficiency gains, demand would have to rise much more steeply to sustain economic growth.
The chief executives of Exxon, Shell, ConocoPhillips and BP agreed that meeting demand growth, driven by rapid population and economic growth in developing countries, would also require some cost-effective renewable technologies and measures to drastically reduce energy waste. But they still expected oil and gas to be the dominant energy sources in the middle of the century.
"The world needs to invest in and develop all economically competitive sources of energy if we are to meet projected demand," Tillerson told the world's biggest oil industry event, held every three years. "Meeting these future energy needs will fall most heavily on those represented here at the World Petroleum Congress," he said.
Based on the historic increases in energy demand that have accompanied economic growth to date, demand in 2050 could be around three times that of 2000, Pete Voser, chief executive of Royal Dutch Shell said.
Energy efficiency gains can realistically be expected to moderate this demand by around 20 percent over the same period, he said, while on the supply side an ordinary increase in production would be around 50 percent. "Yet this would still leave an enormous gap between supply and demand, more or less equivalent in size to the global energy industry as it stood in the year 2000," Voser said.
Over the next few decades that would mean needing 65-70 million additional barrels per day of oil to bridge the gap. "That's equivalent to nearly two OPEC's of additional supply, not to mention the additional capacity we need to bring on stream to absorb the underlying production decline," he said.
Voser, head of Europe's biggest company, said the Fukushima nuclear disaster in Japan combined with instability in producing countries of North Africa and Middle East in 2011, had put additional upward pressure on oil and gas prices. At the same time, regulatory and political uncertainties are adding to price and production cost volatility, which could hinder investment. "We don't yet know whether the recent developments in some countries in the Middle East and North Africa region will impact the longer-term picture for OPEC's supplies," he said.
James Mulva, the chief executive of ConocoPhillips, warned that opposition to fossil fuels in some developed countries and heavy tax burdens could also deter energy companies and producing countries from making the required investments. "Too many governments are deep in debt. And they regard our industry as 'deep pockets' to target for new taxes," he said. "This despite the fact that our industry's effective global tax rates already far exceed those of other industries."
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