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Demand for oil will peak by 2030 given phenomenal rise of clean energy sources – IEA puts world on notice

Oct 29, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – ExxonMobil is rapidly expanding its oil production in offshore Guyana, with two existing developments currently producing a combined 380,000 barrels of oil per day (bpd). The Payara project is set to boost this number to about 600,000 bpd in November. However, a recent World Economic Outlook (WEO) 2023 report from the International Energy Agency (IEA) indicates that global oil demand is expected to peak by the end of this decade, in 2030.

“The combination of growing momentum behind clean energy technologies and structural economic shifts around the world has major implications for fossil fuels, with peaks in global demand for coal, oil and natural gas all visible this decade – the first time this has happened in a WEO scenario based on today’s policy settings, the IEA stated. In this scenario, the share of fossil fuels in global energy supply, which has been stuck for decades at around 80%, declines to 73% by 2030, with global energy-related carbon dioxide (CO2) emissions peaking by 2025.”

Vice President, Dr. Bharrat Jagdeo has said that Guyana has a proud environmental record.

Having not been among the significant carbon emitters historically, he has said that Guyana has the right to exploit its oil and gas resources for national development but pledged to do so in a sustainable manner. He has said that ExxonMobil should produce as quickly as possible so that Guyana can secure the revenues from its share to fund its development and modernisation ahead of the energy transition.

With upcoming projects like Yellowtail and Uaru, both with 250,000 bpd capacity, ExxonMobil is in high gear. It is working to secure approvals for the sixth project, Whiptail. The project is tentatively scheduled for first oil in 2027. The government has contracted Bayphase to assist with Whiptail’s field development plan (FDP) and environmental impact assessment (EIA).

Approval and final investment decisions from ExxonMobil and its partners Hess and CNOOC are anticipated in early 2024. Additionally, the consortium is strongly considering the Fangtooth field as the basis for a seventh development. Guyana is expected to produce 1.2 million bpd by 2027.

ExxonMobil is also considering natural gas developments and is awaiting the government’s natural gas strategy. The government plans to publish the strategy for public comments on Monday. But the IEA has also indicated that gas demand is expected to peak in this decade, by 2030.

According to the IEA, the peak in demand for fossil fuels by 2030 will be driven, “by the phenomenal rise of clean sources of energy, such as solar.”

The government is pursuing hydropower and smaller solar projects, but Jagdeo has rejected calls for solar power to become the baseload for the country’s energy supply.

Jagdeo has been keen on natural gas as a part of Guyana’s future energy mix, particularly with the Gas-to-Energy project expected to start in 2025. He describes natural gas as a transition fuel. The gas project is therefore expected to be part of Guyana’s electricity generation mix for 20 years.

While ExxonMobil’s ambitious expansion in Guyana is aligned with the government’s plans for rapid development, the IEA’s projections are raising critical questions about Guyana’s place in the global energy transition.

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