15 Apr 2024 15:03

Gazprom Neft - Oil demand will rise, and ensuring production is not a trivial task

MOSCOW. April 15 (Interfax) - Demand for oil will grow beyond 2030, but ensuring an increase in production is not an easy task, CEO of Gazprom Neft, Alexander Dyukov said in a lecture at the Russia Forum.

Humanity will not be able to do without oil, at least in the next few decades, he said. The demand for energy consumption in the world will continue to grow and will be driven by the growth of the world's population and the global economy.

"The oil industry has protected and guaranteed segments in this energy balance. If we talk about oil fuel, then this is the segment of air transportation, sea transportation and heavy freight transport. There are essentially no alternatives to oil fuel. The market for non-fuel products, where there are also no alternatives to petrochemical products, will continue to grow as well," Dyukov said.

Gazprom Neft estimates current global oil consumption at 5 billion tonnes per year, and it will increase to 5.7 billion tonnes per year by 2040.

Dyukov said that the share of electric vehicles will grow, but the complete replacement of internal combustion engines by electric motors is a complex, inertial process and will take a long time. He cited data that production and sales of electric vehicles were 16% of sales of all cars in 2023, but at the end of that year, the share of electric vehicles was only 3% of the global vehicle fleet.

Additionally, limitations for electric vehicles and green energy include the limited supply and high cost of lithium and other rare earth metals used in batteries, as well as scarce charging infrastructure.

The company's presentation also said that green energy is limited by the instability of power generation from renewable energy sources (RES), its high cost and the need for large amounts of land.

"This makes many experts believe that oil consumption will grow beyond the horizon of 2030," Dyukov said, recalling that some analysts predicted a peak in consumption in 2019, but it is clear that in 2023, 2024 and 2025 consumption will grow and is already significantly higher than in 2019.

"So, oil consumption will go down, but will we be able to ensure production growth? This is not a trivial task," he said.

Conditions for oil extraction have become significantly more complicated, and there are almost no simple reserves left, Dyakov said. Now we need new technologies, and digitalization for working in both remote and Arctic regions, etc.