Global oil consumption is not peaking any time soon, the head of the International Energy Agency said Monday providing relief to oil producers like Nigeria sitting on vast oil reserves with their economies struggling due to lower demand arising from the coronavirus pandemic.
“In the absence of strong government policies, sustained economic recovery and low oil prices are likely to take global oil demand back to where it was, and beyond,” Fatih Birol said in an interview with Bloomberg News.
The world consumed last year nearly 100 million barrels a day of oil but the IEA predicts that global oil demand for May will be about 21 million barrels per day (bpd) less than pre-crisis levels.
Birol said that behavioral changes in response to the pandemic are visible but not all of them are negative for oil use.
“People are working from home more, but when they do travel, they are more likely to be in cars than public transport,” he said.
“Video conferencing will not solve our energy and climate challenges, good government policies might,” Birol said.
The Nigerian National Petroleum Corporation had earlier set a target to increase Nigeria’s crude oil reserves from 37billion barrels to 40billion barrels by 2020 but a dearth of investment occasioned by poor fiscal and regulatory frameworks has put paid to this ambition.
To compound the problem, security, and environmental challenges in the Niger Delta, high industrial technical cost, funding of Nigeria’s own investments have also proved to be a problem.
Yet the coronavirus pandemic and the changes it portends including remote work and reduced travel, has led some in the energy industry to conclude that peak oil is upon global oil demand.
But the IEA believes otherwise. Birol compared the current situation with 2008 and financial crises when oil demand fell before consumption gradually picked up again.
He believes something similar would happen again soon and the organisation has said that oil will continue to rise well into the next decade
According to the IEA, global petroleum consumption could possibly reach about 105 million barrels a day by 2030 and about 106 million by 2040 as a lower oil consumption from electric cars will basically be offset by more demand from petrochemicals.
