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Energy giants continue to rely (and even heavily) on fossil fuels, finding new sources. And Europe's "green dreams" must wait.
As Europe continues in its forced decarbonisation utopia, the oil giants still believe that the end of fossil fuels belongs in Brussels' dream book. And they continue their way. In the world of energy, a gap has been created between the policies pursued by international institutions, full of good intentions to save the planet, and the reality of the world economy, which, in order to move forward, create development, improve the conditions of living, there is still a need for oil and gas, and therefore it is always necessary to search for and extract them.
Alberto Clò, economist and authoritative researcher of the world of energy, reflects: "Europe finds itself crushed, between the eastern front with the war in Ukraine, which has consequences for gas supplies, and the south, with the war in the Middle East that shows how important oil still is. Brussels pretends not to notice the critical issues regarding energy supply. After October 7, gas prices increased up to 50 percent and this will have consequences in the final costs of electricity and gas, up to protected prices."
The oil giants are well aware of this situation and continue to have oil and gas as their core business, from which they derive the highest percentage of profits. This explains Exxon Mobil's mega-purchase of competitor Pioneer Natural Resources. The merger, worth $59.5 billion, puts the American oil and gas producer in control of the largest field in the United States. Chevron, the California giant that bought Hess, moved quickly in a $53 billion stock transaction. With this operation, Chevron's production will increase by more than 10 percent.
In the second quarter, the Californian company produced almost 3 million barrels of oil per day, while Hess' output reached 387,000 in the same period. The latter is also very active in Guyana, where it has a 30 percent stake in an oil exploration company and it is estimated that in 2024, it will reach 480,000 barrels per day.
In the last four years, Exxon and Hess have made over 30 discoveries in the South American country, and Hess identified a large deposit in the Gulf of Mexico in 2023. Two operations that have not been seen in more than twenty years and, paradoxically, just as the campaign for renewable energies is gathering momentum. And they are not the only ones. Reuters wrote that gas producer Chesapeake Energy is considering buying Southwestern Energy.
The American giants are convinced that demand for fossil fuels will remain high for a long time. And this is what OPEC says in the World Oil Outlook 2023. Global demand will reach 116 million barrels per day by 2045 (in 2022 it was 99.6). In 2028 it should reach 110.2 million barrels per day, i.e. +10.6 million compared to 2022. Moreover, it is a cautious scenario, which should be questioned if the economic growth of India, China, Africa and the East of the Middle accelerates.
OPEC Secretary General Haitham al-Ghais invites Europe to take a shower of realism. "Calls to halt investment in new oil projects are misguided and could lead to energy and economic chaos." OPEC claims that investments in the oil sector amounting to $14 trillion will be needed to meet long-term demand forecasts, about $610 billion a year on average.
The scenario described by the IEA, the International Energy Agency, is of a different nature, it expresses the belief that we are "at the beginning of the end" of the era of fossil fuels. According to his predictions, demand for coal, oil and gas will peak before 2030 and consumption of traditional resources will decrease as climate policies come into force. But as we are still far from the target of reducing global warming by 1.5 degrees Celsius compared to pre-industrial levels, more needs to be done.
Another confirmation of how the sector is doing comes from a Greenpeace report: in 2022 only 0.3 percent of the production of the 12 main European fossil fuel suppliers came from renewable sources. Last year, about 7.3 percent (ie $7.1 billion) of the investments of the companies surveyed went into this type of energy, while about $88.15 billion in funding went to fossil fuel operations.
Last March, the US administration led by Joe Biden, who also talks a lot about respect for the environment, approved ConocoPhillips' Willow oil project, which involves drilling in three areas in the National Petroleum Reserve, in Alaska, to achieve extraction of 629 million barrels of crude oil over the next 30 years. American groups still follow the "oil first" strategy.
Norway, the most important oil and gas producer in Europe, continues to look for new deposits. This year, 35 exploratory wells will be drilled, increasing to 36 in 2024. Jez Averty, Equinor's vice president for underground resources, specified that the strategy is to "ensure that the Norwegian continental platform produces the last drops, the last barrels to t 'surviving the competition.'
The Scandinavian country, although it allocates significant funds to the development of renewable resources and has the potential to not use fossil fuels, continues with great realism in the search for marine deposits. Investments in Norway's oil and gas industry in the North Sea will reach a record $21 billion this year. The oil sector contributes approximately 40 percent of the country's exports and 14 percent of its GDP. It would be unwise to give it up.
Analysts at Scope Ratings describe this scenario: «European groups are choosing different paths because there is no consensus on when to start the transition to low-emission fuels to reduce global oil demand. The International Energy Agency expects this to happen by 2030, OPEC after 2035, the US Energy Information Administration not before 2050. So the integrated oil and gas groups are adapting to oil.”
Europe seems indifferent to what is happening, believing that renewables are the panacea for all ills. Gas and oil represent over 50 percent of energy consumption and are critical factors that will affect final prices and inflation. We forget that since 2005, six thousand billion have been invested in renewable sources that represent less than 5 percent of total energy consumption, while fossil fuels still account for 82 percent of needs. We need realism so we don't keep hurting ourselves. / Bota.al
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