Rosneft’s boss, said that pulling back investment in oil and gas projects raises the risk of a global “acute deficit of oil and gas.” Sechin quipped that “The world consumes oil, but is not ready to invest in it.”
For about three decades, the dawn of an era when cars and industries will no longer run on oil and gas has been dreamt about, discussed and forecast. In the last five years, it seems this dawn has finally arrived. International oil companies are scrambling to invest in alternative energy sources.
Their shareholders are no longer so distinguishable from environmental activists as both make stringent demands to cut carbon emissions which means scaling back oil exploration and production activities.
But the end of oil may still be much exaggerated going by deliberations at an industry event in Russia. Karin Kneissl, the former Austrian Foreign Affairs Minister who was appointed as an independent director by the state-backed energy giant Rosneft last week said at a forum in St Petersburg that the dynamism of Asian economies and rising population in the region will continue to drive demand for oil. She added that African countries will also play a role in sustaining demand for oil.
Kneissle, who courted controversy when she danced with the Russian President, Vladimir Putin at her wedding in August 2018 (when she had left office), expressed the view that the push towards renewable energy and the “stigmatisation” of fossil fuels would end up working to the advantage of oil producing countries. According to her, underinvestment in oil production could ultimately lead to a scarcity and a “supercycle” i.e. a period with very high oil prices.
Echoing her thoughts, Igor Sechin, Rosneft’s boss, said that pulling back investment in oil and gas projects raises the risk of an “acute” global “deficit of oil and gas.” Sechin quipped that “The world consumes oil, but is not ready to invest in it.” He explained that many stakeholders are calling for an end to investments in the petroleum sector while international oil majors are also rewarding shareholders with bigger dividend payouts and share buyback. The focus on shareholder value makes even less funds available for investing in projects to develop projects, including renewable energy ones.
China consumes about 97 million barrels of oil a day which accounts for a 13.2% share of global oil consumption, behind only the United States of America which has a 20.3% share of consumption. But China has also announced a plan to reach net zero emissions by 2060, signaling a transition to cleaner energy.
Partly due to the intense focus of environmental activists on the oil industry, the largest source of carbon emissions in the global economy, Shell has announced a plan to sell off its onshore assets in Nigeria. The onshore production facilities, including pipelines, are frequently attacked by militants and oil thieves, causing large oil spills and environmental damage. The company can no longer afford to be constantly linked to oil spills which destroy large tracts of farmlands and water bodies.