Almost half (46%) of respondents to Bloomberg Intelligence’s (BI) latest oil sector survey of energy-related investors think global demand will be between 101mn and 102mn b/d on average in 2023, with a similar number (44%) believing it will be above 102mn. This compares to the 99.9mn b/d seen in 2022, as cited by the International Energy Agency.

Salih Yilmaz, BI Senior Industry Analyst (Energy), comments: ‘Our latest survey has found a high expectation that oil demand will reach record levels this year, continuing to soar until it hits a peak in 2035. However, while about two-thirds of respondents see oil demand peaking by 2035, this figure is nonetheless down from more than 80% of the respondents in our poll last year, which signals a shift in sentiment on the resilience of demand and outlook for continued consumption growth.’

He continues: ‘Only 22% expect peak oil demand before 2030 compared to almost half of respondents in our last survey. The swift recovery in demand following the pandemic – though slower in some parts of the world than others – may be driving more bullish expectations for near-term growth.’

In comparison to BI’s 2022 survey, there has also been a major shift in opinion related to the pace of green and energy-transition spending by European energy majors. According to the new results, 46% of respondents now believe ‘green’ capex will never reach 50% or more of the overall annual capital outlay; this compares with 15% of respondents previously.

This finding, notes BI, reflects recent strategic adjustments made by Shell and BP this year ‘moderating’ their energy transition pace, with higher oil and gas investment this decade, driving a flattening of hydrocarbon production levels to 2030 versus a projected decline previously.

All of the respondents of BI’s latest survey expect global renewable power to exceed coal-fired generation some time beyond 2030, reflecting divergent views over the pace of transition after coal-fired output reached record highs in 2022.

While the recent uptick appears to be a temporary blip with high gas prices and Russia’s invasion of Ukraine forcing many regions to turn to coal for security of supply, the longer-term trend is reflected in the 68% of respondents who see renewables displacing coal between 2030 and 2035. About 31% of participants expect renewables to overtake coal by 2040 or later, which seems to contradict most long-term forecasts based on accelerating coal-to-gas switching.

On the issue of the transition away from petrol to electric vehicles (EVs), BI’s study found a widening disparity of views on the pace of EV adoption. This year, only 12% of respondents to the BI survey expect EVs to account for 50% of global new-car sales by 2040 – down from 21% in BI’s 2022 survey.

Yilmaz concludes: ‘More than half of respondents don’t expect EVs to become 50% of global new-car sales until 2040 – which appears too conservative – and is up from about 40% of respondents in the 2022 survey. Passenger EV sales are also set to rise sharply in the coming years as policy support strengthens, organic consumer demand rises and major automakers have greater electric line-ups.’

New natural gas production is needed to meet demand 
Meanwhile, global gas demand is projected to rise in the next decade, thus influencing a 12.5% surge in production between 2023 and 2030, according to new Rystad Energy forecasts. Even in scenarios of 1.9°C and 2.5°C warming, with rapid growth in renewable energy sources, the current set of existing gas fields will not meet global demand, requiring rapid growth in unconventional gas supply. Gas-rich geographies like the Middle East, with basins such as Rub al Khali, will play an essential role in bridging that gap, providing an estimated 20mn t/y of LNG by 2040, Rystad says.

The production of unconventional gas, such as shale, has experienced rapid growth in recent years due to technological advancements and reduced lead times. This rapid growth has driven the global share of unconventional gas supply in global gas production at a pace that has previously required significantly more time to achieve, escalating from 4% in 2000 to 12% in 2022 and 35% in 2023, the report finds.

The influx of affordable gas from unconventional sources and ongoing supply from exporting countries like Russia has tempered exploration efforts for conventional gas. Nearly 70% of discovered conventional volumes have yet to receive sanctions for development, highlighting the hurdles and reluctance to develop some of these finds, according to Rystad.

Historically, Russia and the Middle East have dominated conventional gas production. This is not slowing down anytime soon, with Middle Eastern countries ramping up gas volumes as part of their new energy transition strategies.

The share of unconventional gas in global production is forecast to increase to more than 30% by 2030, the report finds. This expected increase in unconventional production is primarily due to a decline in exploration success over the past decade and the lack of developed conventional gas projects, pointing to a reduction in overall conventional gas supply.

Global gas demand is anticipated to rise toward the middle of the 2030s. However, currently producing and underdeveloped gas fields are expected to reach peak production in the next couple of years before starting to decline. Considering all the fields yet to be sanctioned and currently in the discovery lifecycle category, peak production is still far from realisation under ideal scenarios.

Rystad’s analysis of global warming scenarios suggests more gas exploration and production is required to meet 1.9°C or 2.5°C of warming. In every scenario except that for 1.6°C, additional gas resources are needed to meet demand. Therefore, gas exploration and additional capital investment within prominent gas basins or gas-rich countries are necessary.

Unconventional gas will continue to play a prominent role in the world’s supply mix, estimated to increase to approximately a third by 2030. This expected rise in unconventional production is primarily due to a decline in exploration success over the past decade and the lack of developed conventional gas projects, leading to a drop in the overall conventional gas supply.

Only 32% of conventional gas volumes discovered since 2010 are producing, with more than 50% yet to be approved for development. As a result, countries that rely on conventional sources of gas will have to turn towards unconventional volumes to meet net zero targets and satisfy global demand if they do not increase their investment in production, Rystad concludes.