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The Fuel of the Future? Big Oil Says the Black Gold Era Isn’t Over Yet

Amid the global chorus for a green transition, leaders from the oil and gas industry make a compelling case for the resilience of their sector. At the recent Energy Asia conference in Kuala Lumpur, several heavyweights reaffirmed their belief that fossil fuels aren’t going away anytime soon.

John Hess, CEO of the U.S. oil firm Hess Corporation, underscored that oil and gas would remain indispensable for decades. While the world is gradually transitioning towards renewable energy, Hess highlighted the scale of the challenge. “We need to pour $4 trillion a year into clean energy investments, and we’re not even close,” he said. The International Energy Agency estimates that worldwide investment in clean energy will reach just $1.7 trillion by 2023.

Hess also emphasized that oil and gas hold the keys to a secure, affordable energy transition while maintaining economic competitiveness. Furthermore, he projected a boost in oil production to 1.2 million barrels a day by 2027, reflecting his concern over the underinvestment plaguing the industry.

Echoing Hess, Haitham Al Ghais, OPEC’s Secretary General, foresaw a surge in global oil demand to 110 million barrels a day by 2045, driven by urbanization. ExxonMobil, the largest U.S. oil producer, shared a similar outlook, projecting that oil would remain the leading primary energy source till 2050 due to its crucial role in commercial transportation and the chemical industry.

So where will the driving force for this continued oil and gas demand come from? The answer is Asia. With growth rates expected to surpass the U.S. and Europe by the end of the year, the region is set to be the main driver of oil and gas demand. Rapidly developing nations like China, India, Korea, Japan, and Vietnam are already influencing LNG markets, according to TotalEnergies Chairman.

India, expected to witness the highest increase in energy demand globally, is upscaling its refining capacities. “We are one of the few countries set to increase refining capacities by 20% in the next three to four years,” stated A.S. Sahney from Indian Oil Corporation.

But not everyone shares the optimism of prolonged demand. Commodities trading firm Vitol anticipates crude oil demand to peak by 2030 and then rapidly decline due to the expanding EV fleet and energy transition. Market uncertainties, including Russia’s continued oil production and slower-than-expected Chinese economic recovery, further complicate the price outlook.

As debates around energy transition intensify, it’s clear that the future of oil and gas remains a topic of contention. For now, industry titans are confident that the black gold era is far from over.