The energy sector is set for a “golden age of gas” over the next three to four decades, an industry expert has said.
Hari Vamadevan, senior VP and regional manager for UK and West Africa at DNV GL – Oil & Gas, said the oil sector will still exist by 2050, but will be about a third of its current size globally.
Mr Vamadevan also said oil, gas and coal were not equivalents and that the term “fossil fuels” was redundant.
He was speaking following the release of a report on the energy transition from DNV GL, technical advisor to the oil industry.
Mr Vamadevan said the study showed “there is a future for oil and gas”.
The report said global oil demand will peak in 2023, but demand for gas will continue to rise until 2034.
Gas will overtake oil as the world’s primary energy source in 2026, accounting for a quarter of the world’s energy by mid-century.
Global upstream gas capital expenditure will grow from £740 billion in 2015 to a peak of £870bn in 2025.
“Oil and gas are important to the UK and have a future,” Mr Vamadevan said. “Oil will play a smaller part due to the electrification of transport and the increased contribution from renewables, but gas will more prominent.”
He said gas production would need to be decarbonised and that carbon capture and storage would play a part in the energy transition.
He said “backing out of coal” was the “real way” to decarbonise energy.
And he said fossil fuels had been talked about as a “basket of energy” for too long and that oil and gas would have to be “decoupled”.
“As we go forward oil and gas will start to be seen differently,” Mr Vamadevan said. “The term fossil fuel can’t be used anymore, because oil, gas and coal not equivalents.”
Liv Hovem, chief executive of DNV GL – Oil & Gas, said: “The energy transition will be made up of many sub-transitions. Our Outlook affirms that the switch in demand from oil to gas has already begun.
“Significant levels of investment will be needed in the coming decades to support the transition to the least carbon-intensive of the fossil fuels.
“Gas will fuel the energy transition in the lead-up to mid-century. It sets a pathway for the increasing uptake of renewable energy, while safeguarding the secure supply of affordable energy that the world will need during the energy transition.”