OSLO (Reuters) - Global oil demand will peak in 2023 as electric vehicles (EVs) become competitive with cars fueled by petrol and diesel, and after 2040 no new oil developments will likely be needed, quality assurance and risk management firm DNV GL said on Monday.
The forecast from the Norway-headquartered firm, which offers certification and consultancy services to around 100,000 customers globally, adds to investors’ worries about some oil assets becoming stranded if demand enters into permanent decline.
“Amid declining consumption in the future, we see little scope for adding capacity in high-cost areas, such as in the Arctic,” DNV GL said in its long-term forecast, highlighting such a risk.
By around mid-2030s, EVs will account for half of all new light-duty vehicles sold in the world, and 10 years later half of all road transport, light and heavy, will be electric, it added. The transport sector is the main user of oil.
“After 2040 we will likely enter a period where new oil fields are not required to replace depleted fields,” DNV GL said, adding that by 2050 oil demand is expected to be about a half of its peak.
Demand for natural gas is expected to grow until the mid-2030s, when capital spending on non-fossil energy will overtake spending on fossil energy, DNV GL said in its report.
“The attention of boardrooms and cabinets should be fixed on the dramatic energy transition that is unfolding,” said Remi Eriksen, the group’s president and chief executive.
Investors are increasingly worried that some oil and gas assets could be left in the ground as a result of stricter regulations to curb carbon emissions and the fall in costs of renewable energy and car batteries.
Oil majors have different views on possible oil demand peak, but all say that even if demand peaks, trillions of dollars of investments in oil and gas will still be needed to develop new barrels due to the natural decline of existing fields.
Exxon Mobil, the world’s largest listed oil company, said on Feb. 2 that oil demand could fall by 25 percent to around 78 million barrels per day (mbd) from the current levels if governments choose to implement measures to limit global warming.
The company, however, did not disclose how efforts to limit carbon emissions would impact its business. In a separate report it said that excluding those climate measures, oil demand is expected to grow by 20 percent by 2040, driven by commercial transport and the chemical industry.
In April, Anglo-Dutch Shell said it saw little risk of having “stranded assets” in its portfolio, because four-fifths of its current oil and gas reserves would be extracted before 2030.
Shell, which has been producing oil since 1907, sees the oil demand peaking as early as the end of the next decade, while its London-based peer BP sees it coming a decade later.
The Paris-based International Energy Agency (IEA), which advises industrialized nations on energy policy, sees oil demand rising to 105 mbd by 2040 under its central New Policies scenario, based on existing legislation and announced plans.
Reporting by Nerijus Adomaitis; Editing by Will Dunham
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