Crude oil will maintain its position as a critical energy source in the short- and medium-term as growing GDP will bolster oil and gas demand, according to the Chief Executive Officer of energy giant Schlumberger.
Speaking at JP Morgan’s Power and Renewables Conference on Tuesday, Olivier Le Peuch said the onset of a strong multi-year economic rebound would usher in a new cycle of oil and gas demand growth.
Oil and gas demand predictions continue to demonstrate growth and resilience as a crucial component of the energy mix, Le Peuch said.
This cycle will be “distinct because it will be marked by capital stewardship, large-scale adoption of digital transformation, and an energy transition that will result in increased investment in lower-carbon energy sources,” he said.
Le Peuch highlighted the potential for what he called would be a “demand-led supercycle” with the dynamic pace of the pandemic recovery along with the convergence of multiple elements.
"First, GDP is poised to grow significantly in the short and medium term, translating into strong demand for oil and gas, while oil intensity should persist during this period, supporting oil’s position as a critical energy input," he said.
Second, Le Peuch said, "demand and supply will rebalance sooner than previously anticipated, due to lower investment—requiring a drawdown of spare capacity from OPEC+ to meet GDP-driven demand growth."
Le Peuch also underscored that North America and OPEC+ are projected to keep their capital deployment and supply additions conservative, supporting a favorable commodities price environment and investment landscape in the short term.
By Sibel Morrow