29 June 17 The Business Times by ANDREA SOH
WHILE energy demand is slowing due to improving energy efficiency, it will still grow by 30 per cent over the next two decades, with almost all of that coming from emerging economies, especially Asia.
This means that the oil and gas industry needs to produce hydrocarbons that are cleaner and at lower cost, and by harnessing the current wave of technological advances to do so, said BP chief executive Bob Dudley.
BP, in a report released two weeks ago, estimates that global GDP will double over the next two decades, but energy demand will increase by only 30 per cent, thanks to a rebalancing of China's economy and more attention paid to improving energy efficiency. Mr Dudley noted in a speech at a company event on Wednesday evening that energy and economic progress have always been correlated.
Since 1967, the year Asean was formed, the world economy has grown from just under US$2 trillion to over US$75 trillion.
"This progress has been underpinned by the use of energy, which has more than tripled during that time," he noted. "Notably, Asean energy demand has increased by 20 times over the same period."
In the past year, Asean's energy demand has grown five per cent, five times the global average of one per cent. This, said Mr Dudley, represents increased demand for transport fuels and other products.
Still, the global fuel mix is changing. The group's latest Statistical Review of World Energy showed that renewables grew the most in the past year at 12 per cent, while coal use continued to fall. The confluence of lower energy demand and use of clean energy resulted in carbon emissions staying stagnant for a third straight year in 2016, though these remained well above targets set out under the 2015 Paris climate change agreement.
These trends together present a complex challenge for the oil industry, said Mr Dudley. "We need to provide more energy than ever before and at the same time reduce carbon emissions more than ever before - all in a world that is more competitive than ever before, given the continuing downward pressure on prices."
This means the industry needs to continue its progress in developing and producing hydrocarbons efficiently and at a lower cost, as well as producing cleaner hydrocarbons such as natural gas.
At the same time, supercomputing and seismic imaging are helping to make oil and gas production more efficient and safer.
The potential of other technologies such as big data, artificial intelligence, cognitive computing, robotics, nano and biotechnology, and advanced materials are also just starting to emerge. "I don't believe there is another sector where more is happening or where the possibilities are greater," said Mr Dudley.
With the global fuel mix evolving, Singapore also plans to strengthen its position as a trading hub by playing a key role in liquefied natural gas (LNG) which is emerging as a major fuel of the future, said Minister for Trade and Industry (Industry) S Iswaran at the event.
There are already 40 LNG companies with trading or business development activities in Singapore, complemented by other industry players such as law firms, shipbrokers and price reporting agencies, he noted.
"We will continue to enhance Singapore's value proposition for the neutral price formation for LNG in Asia," he said.