More than half of the world’s energy supplies will continue to come from oil and gas by 2040, according to Dr Sultan Al Jaber, Minister of State and Adnoc group executive office Image Credit: Virendra Saklani/Gulf News

Abu Dhabi: More than half of the world’s energy supplies will continue to come from oil and gas by 2040, highlighting the need for the oil industry to keep up with the rising demand, said Dr Sultan Al Jaber, Minister of State and Adnoc group executive officer, on the opening day of the Abu Dhabi Petroleum Exhibition and Conference.

Taking place at the Abu Dhabi National Exhibition Centre, this year’s event is the largest one yet, with over 10,000 delegates from 167 countries taking part.

In total, 150,000 visitors are expected to attend the four-day event.

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This year’s event comes amid a challenging time for the oil industry, which has seen oil prices going down as a result of several combined factors including the US-China trade war, demand and oversupply concerns, and low economic growth rates.

“Our industry is being disrupted on multiple levels — disrupted by new technology, new business and operating models, new forms of energy and a new geopolitical order,” said Al Jaber, highlighting the challenges faced by the oil and gas sector.

“The oil and gas company of today can be a winner of tomorrow if it operates at a lower level of cost and a higher level of performance; if it brings digital into the core of its operations [and] if it embeds sustainability into its DNA,” he added.

Al Jaber said that oil and gas would continue to form a key pillar of the global energy mix, with Adnoc also on pace to increase its oil production up to 4 million barrels per day as well as becoming a gas exporter.

“The fact is by 2040 all the energy currently consumed in the US, India and Japan will be added to the global demand. And even in the most fast-paced transition scenarios, oil and gas will still provide the source for over of half it.

“These facts are undisputed and simply make a compelling business case to invest in the future of our industry,” he added.

“Here at Adnoc we are well on track to expand our oil production capacity to 4 million bpd by the end of next year. We are finding new reserves of natural gas, getting [us] closer to self-sufficiency and [we] will eventually become a gas net exporter,” he said.

Oil demand

For his part, Suhail Al Mazrouei, Minister of Energy and Industry, said he was not worried about the growth of oil demand, and said that it would compliment new types of energy resources such as renewables.

“I’m not worried about growth. I think we need to change the way we consume energy rather than looking at limiting one form of energy.

“We have much cleaner forms of energy — renewables, solar [and] wind at historically low costs that are competing with other forms of energy. So definitely the greener forms of energy will grow … but, conventional oil and gas will also grow,” he added.

Al Mazrouei also put the downturn in oil prices on increased output in recent years, primarily from the US.

“I think the shock we had in recent few years was due to the huge growth from the US. We went from 7 million [bpd] to almost 12 million [bpd] in a very short time space, and that wouldn’t make sense for the investors to continue at that pace.

“We’re seeing some correction happening as we speak,” he added.

Looking ahead to 2020, Al Mazrouei said demand would be up in the range of 1.2 to 1.5 million bpd.

“I think whether it’s 1.5 million or 1.2 million [bpd] there is growth, and that growth is reasonable because the population is growing. The number of people moving from poverty to middle class is increasing in major countries like China [and] India.”

Echoing the same sentiments, Opec secretary-general Sanusi Barkindo, who was also involved on the panel, said that a surge in population growth by 2040 would require more oil and gas demand.

“Despite all the growth rates in renewables, which we applaud [and] which we support … By 2040 … 53 per cent of the global energy mix will be accounted for by oil and gas.

“No one source or group of energy sources will meet not just the current demand, but this growing demand of [an] additional 1.6 billion people coming into this world by 2040 and a global economy that is double the size of the current global economy,” he added.