Oil & Energy
Oil Demand Future Increasingly Clear as Trends Solidify
In June, the International Energy Agency (IEA) forecast peak oil demand growth in less than six years. Later that same month, the Energy Institute revealed demand is still growing and where it declines, the declines are minuscule.
While the two reports paint two rather different pictures, they also offer a glimpse into the actual future of oil demand and supply, especially viewed in the context of trends like a slowdown in U.S. oil output and China’s recent boost in local oil and gas exploration. Oil and gas are going nowhere.
“Increased use of EVs, emerging clean energy technologies and more expansive efficiency policies are combining to chart a much slower growth trajectory for oil demand, plateauing towards the end of our 2023-2030 forecast period’, the EIA wrote in its Oil 2024 long-term forecast about energy trends.
Yet, this increasingly resembles wishful thinking and idealism rather than reality. In the world as it actually is, EV adoption is experiencing a slowdown, and while this week’s second-quarter sales figures from Big Auto suggest a partial reversal, the bombastic predictions of an EV revolution remain unfulfilled, with Tesla, the world’s bestseller, posting lower than expected deliveries in the second quarter.
At the same time, however, GM reported a 40per cent increase in EV sales for the second quarter. It is doubtful if this should be cause for celebration seeing as the carmaker is actually losing money on every EV it sells but GM is putting a positive spin on it at a time when survey after survey suggests the appeal of EVs is waning among drivers.
The latest comes from McKinsey and reveals that close to half of American EV drivers would be willing to switch back to internal combustion engine vehicles. Globally, in the 15 countries where McKinsey conducted the survey, the percentage was lower, at 29%, but still significant when we are talking about a revolution and displacement of internal combustion technology.
EVs have certainly had an impact on oil demand in China. In other parts of the world, namely Europe and North America, the growth in EV sales has had a negligible impact on oil demand, which, per the Energy Institute, fell by 1per cent in Europe and 0.8per cent in North America. At the same time, it rose by 5per cent in Asia, which includes the world’s biggest EV market, China.
In fairness, this growth in oil demand is slowing down, at least in China. Imports of crude oil have trended lower than expected since the start of the year and while it could be argued that expectations may have been unrealistic, the decline is affecting the outlook on demand. Then there are the forecasts, including from Chinese energy majors, that demand growth in the world’s top importer is about to peak.
Sinopec, the state energy giant and the world’s biggest refiner, reported in May that it expected demand growth in the country to peak in three years. The company cited growth in EV sales as the reason for its forecast and also said that, by 2045, the country’s energy mix would be dominated by non-hydrocarbon sources.
Whether the latter prediction will come true remains to be seen, as Beijing this week announced the setting up of a new state-controlled entity to develop local oil and gas resources, including unconventional reservoirs.
The entity comprises CNPC and Sinopec, along with companies from the steel, equipment, and infrastructure industries. In other words, China is building an integrated oil and gas resource developer.
This does not go against the expectations of peak demand growth, but it does suggest an extended plateau in demand after the peak is reached.
It is not only China that needs to be paid attention when it comes to oil demand prospects. The minor demand declines in Europe and North America are more proof that the destruction of demand for oil that the energy transition was expected to bring about is not happening.
Even in Norway, the biggest per-capita EV adopter nation, demand for oil has not, in fact, declined as the number of EVs on the roads rose.
Neither has the EU’s thirst for natural gas declined as it builds ever more wind and solar. The latest update revealed that Europe imported 23per cent more gas from Russia in June than a year ago, despite the sanction push against every type of Russian hydrocarbon. In the previous month, Russian gas imports even exceeded imports from the United States.
A lot of forecasts predict an end to the world’s appetite for hydrocarbons. Yet the reality is that oil and gas and coal, too are here to stay for a long time, even if demand starts growing more slowly or even stops growing at some point, in post-industrial societies.
The problem of these post-industrial societies is that they need the output of industrialised ones and industrialisation is inevitably tied to the cheap, round-the-clock energy provided by hydrocarbons. Oil demand doom is nowhere near looming.
Slav writes for Oilprice.com.
By: Irina Slav
The Nigerian Navy Units under the auspices of Operation Delta Sanity says it has recorded significant successes against crude oil theft and illegal refining sites in the Niger Delta.
The Navy, in an updated operations, said the successes were recorded between Thursday August 29 and Monday September 2, 2024.
According to the information, on 29th August, seven large cotonou and two fibre boats operated by heavily armed oil thieves loading crude oil from an illegal loading point around Botokiri axis of Nembe Local Government Area of Bayelsa State were seized.
Also, on 31st August, six suspected crude oil thieves with 109 sacks of illegally refined petroleum products, four fibre boats and two wooden boats were arrested and seized along Ogboinbiri-Kasama-Azama-Isoni of Bayelsa State.
Again, on 1st September, two wooden boats and 328 sacks of illegally refined automated Gas Oil were seized at Otuogori community’s river bank in Yenagoa, Bayelsa State.
Additionally, on 2nd September, 35 sacks of illegally refined Automotive Gas Oil in a wooden boat were seized at Gbaraun area of Southern Ijaw Local Government Area of Bayelsa State.
These successes indicate the effectiveness of Operation Delta Sanity, and the resolve of the Nigerian Navy to sustain current efforts to rid Nigeria’s maritime environment of the menace of crude oil theft and enhance crude oil production for the overall growth of the economy.
The Eko Electricity Distribution Company Plc. has clarified that the Ministries, Departments, and Agencies of the Federal Government, including the military, owed the power distribution company N42billion as the cost of electricity consumed and not N144billion.
The Bureau of Public Enterprise(BPE), disclosed this in a Statement signed by the Head, Public Communications, Amina Othman, at the Weekend.
According to the Statement, the Disco affirmed that its total outstanding debt was N144billion, of which the MDAs and the military owe N42billion.
“The Eko Electricity Distribution Company Plc has clarified that contrary to earlier reports, the aggregate outstanding debt owed by consumers is N144billion, out of which, ministries, departments, and agencies including the military owe N42billion”, Othman stated.
The Statement said this was against prior reports that the MDAs, including the army, police, and other government agencies, were owing N144billion and had refused to pay.
The Disco said, “the clarification became necessary for proper reportage on the matter and to put the records straight”, it stated.
Recall that during a recent oversight visit by members of the House of Representatives Committee on Privatisation and Commercialisation, led by its Chairman, Ibrahim, the Acting Managing Director of the EKEDC, Mrs. Rekhiat Momoh, among other things, informed the members about the legacy debts owed the company by MDAs.
The committee had reported the acting MD as stating that the company was owed N144billion by MDAs within its operational area, saying she mentioned that the military, police, and various state government agencies failed to settle their debts, creating financial difficulties for the distribution company.
Energy infrastructure, a crucial part of global oil and gas supply and the energy transition, are set to get a boost after a heavy lifting equipment provider unveiled the world’s strongest crane-equipment capable of lifting 6,000 tons, or 15 fully loaded Boeing 747 aircraft.
Dutch heavy lifting and transport services company Mammoet has launched a new type of crane, the SK6,000, which, the firm said, could be used for modules to be built faster and also “bigger than ever before”.
As oil and gas continue to be a key part of the world’s energy system—and likely will continue for decades to come—and as renewable energy developers aim for bigger wind turbines, the support equipment for installing oil and gas platforms, offshore wind equipment, and even nuclear power stations is becoming bigger.
Bigger cranes such Mammoet’s SK6,000 could remove some of the limitations of engineering and construction firms. These firms are generally limited by how much weight can be lifted when installed on a platform or turbine.
Cranes that can carry 5,000 tons and more can shorten the time of a project being erected on a site, onshore or offshore, Mammoet says.
“Limitations on lifting capacity force engineers to fabricate smaller modules than would be optimal; tying up site space and increasing the complexity and duration of projects,” the company notes.
“This limitation can also narrow the execution choices available during each project’s planning stage and the percentage of each project that can be executed locally.”
These days, energy companies and their contractors seek faster deployment of energy infrastructure, be it wind turbines or floating production storage and offloading (FPSO) vessels and platforms for oil and gas production.
“There are so many supply chain constraints at the moment that need to be de-bottlenecked,” Gavin Kerr, Mammoet’s director of global services, told Bloomberg, commenting on the new crane.
“The bigger everything gets, you need bigger cranes.”
Moreover, the SK6,000 is containerised and can be assembled quickly on-site. This feature allows it to deliver heavy lift capability wherever it is needed, giving contractors greater flexibility in where and how energy projects are completed” Mammoet said.
“With the innovation of the SK6,000 crane, our customers can think bigger than ever before; pushing modules beyond the 4,000t and even 5,000t barriers. Its low ground bearing capacity also means the crane can be used all over the world”, said Mammoet’s Sales Director Giovanni Alders.
“With its long outreach, small minimum footprint and relatively small site impact, the SK6,000 greatly reduces the topside integration time.
“Needless to say, with larger building blocks you spend less time connecting and testing, and more time producing” Alders added
Energy companies do need faster permit-to-production times in both oil and gas and renewable energy to provide the conventional and green energy sources the world will need.
Wind turbine technology is evolving and making the hub height increasingly taller. According to the Office of Energy Efficiency & Renewable Energy at the U.S. Department of Energy, the hub height for utility-scale land-based wind turbines has surged by 83per cent since 1998–1999, to about 103.4 meters (339 feet) in 2023. That’s taller than the statue of Liberty.
The average hub height for offshore wind turbines in the United States is projected to grow even taller from 100 meters (330 feet) in 2016 to about 150 meters (500 feet), or about the height of the Washington Monument, in 2035, DOE said.
In the oil and gas industry, new resource development is needed as demand for LNG grows and legacy oilfields mature and output declines.
If contractors can bring energy projects on stream faster, both oil and gas supply and the energy transition will benefit.
By: Charles Kennedy
