Energy transition is lagging, oil demand will stay: industry players

Oil and gas will continue to be leading sources of energy for decades to come on the back of a lagging energy transition, major industry players said at the Energy Asia conference held in Malaysia’s capital Kuala Lumpur this week.

“We think the biggest realization that should come out of this conference … is oil and gas are needed for decades to come,” said John Hess, CEO of U.S. oil company Hess Corporation.

“Energy transition is going to take a lot longer, it’s going to cost a lot more money and need new technologies that don’t even exist today,” he continued.

When it comes to clean energy, the world needs to invest $4 trillion a year — and it’s nowhere close, Hess said.

According to the International Energy Agency, global investment in clean energy is set to rise to $1.7 trillion in 2023.

Hess said oil and gas are key to the world’s economic competitiveness, as well as an affordable and secure energy transition.

The oil market will be more constructive in the second half of the year, with production going up to 1.2 million barrels a day in 2027, he predicted. He noted that the biggest challenge the world has is the underinvestment in the industry.

“The world is facing a structural deficit in energy supply, in oil and gas, in clean energy,” he said.

Likewise, at the the conference’s opening address, OPEC’s Secretary General projected global oil demand will rise to 110 million barrels a day by 2045. The growth comes on the back of rapid urbanization over the next few years, Haitham Al Ghais said.

In an e-mail exchange Tuesday, the largest U.S. oil producer ExxonMobil reiterated the same.

The company expects oil to remain the largest primary source of energy for at least two more decades given its vital place in the commercial transportation and chemical industry.

“Liquids are projected to remain the world’s leading energy source in 2050, even as demand growth slows beyond 2025,” Erin McGrath, ExxonMobil’s public and government affairs senior advisor, told CNBC.

“Overall, demand for liquids is expected to rise by about 15 million barrels per day by 2050. Almost all the growth will come from the emerging markets of Asia, Africa, the Middle East and Latin America.”

Asia will continue to spur the demand for oil and gas, as the region’s growth is set to overtake the U.S. and Europe by the end of the year.

“This is the region where the growth in energy demand will be, and more to come,” S&P Global’s Vice Chairman Dan Yergin said at the energy conference. He said Southeast Asia’s population alone is 50% greater than the European…