In the next 30 years, the upstream investment in oil and gas is expected to reach up to $20 trillion, which will bring many new development opportunities for the oil and gas industry

Article| Jiangna

Recently,BP released the BP world energy outlook(2020 edition)(hereinafter referred to as"outlook")in Beijing,which discussed the possible path of global energy transformation.

Unlike in the past,BP's outlook report this year extends to 2050,10 years ahead of the previous version,oil link learned through a live link.

In the outlook,BP presents three main scenarios for the energy transition over the next 30 years:a rapid transition scenario,a net zero scenario,and a business-as-usual scenario.

We believe that the low-carbon transformation will lead to a fundamental change in the global energy system,and the future energy industry will no longer be dominated by a certain type of energy,but will be driven by market factors to form a pattern of multiple coexistence.

At the same time,the Outlook also emphasizes that the role of oil,gas and coal is likely to decline gradually in the future,and renewable energy will become the fastest growing energy source in the next 30 years.Affected by this,the way of investment in the energy industry will also undergo a major shift.

01,oil demand peaked

Nowadays,almost all the oil companies in the world are talking about transformation,even at the expense of reducing the main oil industry in order to seek new development.With the impact of the external environment and the impact of new energy sources,what is the future of the oil industry?The outlook released by BP has made a detailed analysis of this.

Outlook believes that in the next three decades,the world's demand for oil will show a downward trend,and it will be difficult for oil demand to return to the level before the epidemic.

This means that oil demand,which has dominated the energy industry for many years,has peaked at a time when major countries in the world generally attach importance to green development and promote low-carbon transformation.

To say the least,even if the world's energy transformation trend has been developing slowly along the track of the past few years,oil demand will peak in the next three to five years.

In an online meeting with BP's chief economist,Mr.Dai Sipan,oil link learned that the outlook believes that the decline in oil demand is caused by the continuous improvement of energy efficiency and the electrification of road traffic.

As we all know,the most important application scenario of petroleum is in the field of transportation.Data from 2018 show that oil accounts for more than 90%of transportation energy.Once the role of oil in the field of transportation has declined dramatically,its position in the energy industry will be affected.

In the transport sector,oil use will peak in the mid-to-late 2020s,and the reduced use will gradually be replaced by factors such as electrification of the transport sector,the Outlook said.By 2050,the proportion of oil in transportation energy will drop to 40%.

It can be seen that as one of the main fossil energy sources, the reduction of oil's share in the energy system may only be a matter of time.
So does this mean that the oil industry has begun to decline?In fact, it is not.
Mr. Dai Sipan, chief economist of BP, stressed that although oil demand will decline, oil still plays an important role in the energy system, especially in the next 10 to 15 years, the important position of oil will not be replaced.
Based on these judgments, the Outlook believes that the world will still invest heavily in new oil and gas production, otherwise it will not be able to meet the gap between supply and demand.In the next 30 years, the upstream investment in oil and gas will still be as high as 9 to 20 trillion US dollars.This will also bring many new development opportunities for the oil industry.
02, natural gas becomes the biggest "variable"
The future of natural gas is more uncertain than the decline in oil demand and the rise in renewable energy.
For the future of natural gas, the Outlook predicts that global demand for natural gas will peak in the mid-2020s and mid-1930s, respectively, and then show a downward trend.
By 2050 or so, the demand for natural gas is likely to fall back to the level of 2018, or even less than one third of the consumption in 2018.
However, in the conservative scenario, the development trend of natural gas is completely different.It is estimated that under this scenario, the demand for natural gas will continue to grow in the next 30 years, reaching about 530 billion cubic meters by 2050

In previous estimates,natural gas was seen as the fastest growing energy source.This year,however,the trend of natural gas under different scenarios has changed dramatically.

In response to this question,the oil link talked to Mr.Dai Sipan,the chief economist of BP.Speaking to Oil Link,Mr Deispan said the role of natural gas was still not negligible.Compared with oil,natural gas is more resilient,especially in the next 15 years or so to achieve the decarbonization of the energy structure to play an important role.

In particular,the Outlook emphasizes that China's natural gas industry will continue to maintain strong growth driven by shale gas and other factors,especially the application of natural gas in the industrial sector will become more and more prominent.Mr.Dai Sipan predicted that China would further reduce its dependence on imported natural gas and increase the development of domestic natural gas.

Who is the"King of New Energy"?

Nowadays,the global energy industry is in a critical period of transition from fossil energy such as coal and oil to renewable energy.Oil companies are bound to adjust their development pattern under the influence of this powerful competitor.

In August,BP released its latest 10-year strategy,slashing its oil assets and focusing more on low-carbon technologies such as renewable energy.

As for why BP is so"aggressive,"perhaps we can learn a thing or two from the outlook.

Under all the scenarios projected in the Outlook,renewable energy is the fastest growing energy source in the next 30 years.In the process of rapid transformation,about 45%of the primary energy used in the world will come from renewable energy by 2050.

Nowadays,solar energy,wind energy,hydrogen energy,geothermal energy,biomass energy,nuclear energy and other new energy sources have all appeared on the world energy stage.Which kind of energy will take the lead in breaking out and become the"king of new energy"?

The Outlook begins by emphasizing that wind and solar energy will play an important role in the future.Over the next decade,the installed capacity of wind and solar power will grow by about 350 gigawatts and 550 gigawatts annually,respectively.

As for the current problems of high cost and difficult profitability in the industry,Mr.Dai Sipan said that,just like the cost reduction process in the past decade,the cost curve of wind and solar energy will further decline in the future,for example,the cost of solar power generation will drop by more than 65%.

In addition,the Outlook also points out that the role of hydrogen energy and bioenergy will become increasingly prominent in the process of substantial decarbonization of the energy system.Especially after 2030,the two will play a more prominent role in terminal consumption.

04.There will be two key changes in the energy industry.

With the rapid transformation of energy,what key changes will take place in the industry?Some answers are provided in BP's outlook.

First,the future energy pattern will undergo fundamental changes,and diversification will become the norm.

Oil and gas,while still in demand for decades,will face increasing challenges as society weans itself off fossil fuels.

During this period,the momentum of renewable energy is rising,and it is expected to gradually become the dominant energy source in the future.

Under the influence of this change,the investment pattern of energy will also undergo significant changes.More and more funds will be invested in the field of renewable energy.

Second,the focus of the energy market will shift from traditional upstream producers to consumers.In the past,the energy market was dominated by upstream oil and gas producers,whose production was directly linked to market consumption.

But now the focus of the market is changing,and consumers will have more choices.Which kind of fuel consumers choose and how they consume energy affect the production of upstream enterprises.

Mr.Dai Sipan emphasized that if an energy company wants to succeed and remain successful in such a changing market,it must not only focus on oil and gas,but also constantly adjust to provide the energy solutions that users need.