Investment in oil, gas essential over declining production
In the longer-term, investment in oil and gas remain essential to meet demand and replace declining production, according to the latest report by the International Energy Agency (IEA).
Nigeria’s crude oil production has been on the decline, dropping by 130, 000 barrel per day (bpd) in August to an average of 1.44 million bpd, as oil companies struggle to revamp pipelines in Niger Delta following severe attacks by militants.
The report released recently on the company, the growth in renewables and energy efficiency lessens the call on oil and gas imports in many countries.
As a result of major transformations in the global energy system that take place over the next decades, renewables and natural gas are expected to meet energy demand growth until 2040.
It noted that a detailed analysis of the pledges made for the Paris Agreement on climate change finds that the era of fossil fuels appears far from over and underscores the challenge of reaching more ambitious climate goals.
It noted that government policies, as well as cost reductions across the energy sector, enable a doubling of both renewables – subject of a special focus in this year’s outlook – and of improvements in energy efficiency over the next 25 years.
IEA said that natural gas continues to expand its role while the shares of coal and oil fall back.
IEA Executive Director, Dr. Faith Biro states: “We see clear winners for the next 25 years – natural gas but especially wind and solar – replacing the champion of the previous 25 years, coal. But there is no single story about the future of global energy: in practice, government policies will determine where we go from here.”
The report stated that traditional concerns related to oil and gas supply remain – and are reinforced by record falls in investment levels.
It showed that another year of lower upstream oil investment in 2017 would create a significant risk of a shortfall in new conventional supply within a few years.
The report stated: “ Increased LNG shipments also change how gas security is perceived. At the same time, the variable nature of renewables in power generation, especially wind and solar, entails a new focus on electricity security.
Global oil demand continues to grow until 2040, mostly because of the lack of easy alternatives to oil in road freight, aviation and petrochemicals, according to WEO-2016. However, oil demand from passenger cars declined, even as the number of vehicles doubles in the next quarter century.