The drop in oil price from June last year onwards seemed to catch the industry somewhat off guard with the speed of which it deteriorated from a healthy $100 plus, to sitting just above $40 in January.
So I was intrigued to join the recent BP 2035 Outlook discussion, to hear what the company would forecast for the future of energy, as it would seem no one was able to predict the speed of the current crash.
Spencer Dale, group chief economist, and Bob Dudley, group chief executive, addressed the room of industry peers in London with, dare I say, positivity for the future - and their predictions were fascinating.
Mr Dale, who joined BP from the Bank of England, stated that contrary to belief, resources were not actually the issue. He saw “connecting the resources to demand” as the greatest challenge.
As faces in the audience studied Mr Dale like a sorcerer looking into his crystal ball, he made the gentle reminder that BP’s forecast value was in whether it helped the strategic decisions of oil and gas companies, not by its precision.
The BP Outlook predicts the ever-changing energy mix and how it must adapt to meet the world’s growing energy demands. It is no surprise that coal is projected to have the slowest growth in demand, while natural gas is predicted to have the fastest. Renewables will also see healthy progression with a predicted 6.5% growth per annum, and the EU leading the way in production.
Mr Dale went on to explain how global oil demand will grow by 90 million barrels per day by 2035 – a positive forecast to say the least. On the topic of OPEC, it was predicted the organisation would hold a 40% market share that is much the same as we see today, and will remain an essential force in the market.
The outlook also forecasted a growing demand from Asia for LNG, with the gas becoming a dominant force in global gas consumption. While LNG thrives, the underlying uncertainty that the shale revolution currently sweeping the US could be more ‘contagious’ than first thought was highlighted, with global activity increasing.
By the end of 2035, BP predicts the industry will see a more diversified portfolio of energy with an energy mix consisting of renewables, oil and coal with no clear ‘leader’ in the ring.
So what can we really expect to see in 2035? The truth is, no one really knows. But the BP forecast provides a glimmer of hope that as global energy demand continues to increase, we can see a relatively positive future. All I can say is if I could predict the real outcome, I would be a very rich woman!