IEA BRINGS FOCUS BACK ON ‘PEAK OIL DEMAND BY 2030’ DEBATE

▶ Opec’s Al Ghais says it is hard to predict plateauing time frame

The debate over peak oil demand was back in focus on Tuesday, with the head of the International Energy Agency saying that some oil and gas companies agreed with its prediction that global consumption would plateau before 2030.

The rising share of solar and wind in electricity generation, growing electric vehicle sales and economic development in key emerging nations will lead to that conclusion, Fatih Birol told the IEA Energy Innovation Forum in Paris.

However, Opec secretary general Haitham Al Ghais told the World Governments Summit in Dubai yesterday that peak oil demand was “something way far out” but declined to provide a timeline.

It’s not easy to definitively state when this peak would happen, whether it’s “tomorrow, in five years, or in 10 years”, Mr Al Ghais said. “Nobody has a crystal ball.”

He said Opec bases its estimates on “raw data” and is not influenced by “ideological concepts”. “We take the approach that all forms of energy will be required. No single source of energy will be able to replace another … oil today represents over 30 per cent of the global energy mix,” Mr Al Ghais said.

Opec and the IEA have been at odds regarding their differing assumptions concerning peak oil and scenarios for demand growth. Last year, the group of oil-producing countries raised its long-term crude demand forecast to 116 million barrels per day by 2045, an increase of 6 million bpd from its previous estimate. This year, Opec expects demand to expand by more than 2 million bpd, Mr Al Ghais said, adding that he was encouraged by upward gross domestic product estimate revisions in some countries.

“Although there are question marks … we still feel very robust about China, and we are seeing the Chinese government stepping in to take corrective measures,” Mr Al Ghais said.

“All of this with … [along with] the phenomenal economic growth … in India leads us to believe that we will have a strong economy this year with positive implications for oil demand.”

India, the world’s most populous nation, is expected to be the largest source of oil demand growth between now and 2030, according to the IEA.

The transition towards cleaner forms of energy is already under way and is unlikely to be significantly altered by policy changes resulting from events like elections in some countries, energy officials said.

In Paris, Mr Birol repeated the IEA’s forecast that global oil demand will hit a plateau before the end of this decade. adding: “I am very happy to see that several others, including some oil and gas companies, are agreeing with this statement.”

Clean energy and innovative technologies aimed at lowering carbon emissions are moving in the “right direction”, driven by industrial policies and falling costs, not environmental regulations alone, he said.

“What happens if one or two or three or five countries change this policy direction? Are we going to see a stop or slowdown or going back?” he said. “My answer is absolutely not.”

The IEA expects renewable energy to make up more than one third of total electricity generation by early 2025, overtaking coal.