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BP Ups Oil & Gas Demand Forecasts Amid Slow Clean Energy Shift
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BP plc (BP - Free Report) has projected that the global oil demand will peak next year, with wind and solar capacity set to expand rapidly under both main scenarios outlined in its annual Energy Outlook. The report, which studies the evolution of the global energy system up to 2050, suggests significant shifts in energy consumption patterns and carbon emissions. The energy giant highlighted these projections in its annual outlook, cautioning that a delay in the shift to renewable power could prove "costly."
Scenarios and Emissions
BP's Energy Outlook presents two scenarios — the Current Trajectory and the Net Zero scenario. Both scenarios predict that carbon emissions, predominantly from fossil fuels, will peak in the mid-2020s. The Current Trajectory scenario is based on existing climate policies and carbon reduction commitments. In contrast, the Net Zero scenario assumes stricter climate policies aligned with the Paris Agreement, aiming for a 95% reduction in carbon emissions by mid-century.
In the Current Trajectory scenario, primary energy demand continues to rise until the mid-2030s, then stabilizes. By 2050, energy demand is projected to be around 5% higher than in 2022. Conversely, the Net Zero scenario sees energy demand peaking mid-decade and declining thereafter, with a 25% reduction by 2050 compared to 2022.
Oil and Natural Gas
According to the outlook, oil demand is expected to peak around 102 million barrels per day (bpd) in 2025 under both scenarios. However, the rate of decline varies.
In the Current Trajectory, oil consumption is expected to drop to around 75 million bpd by 2050, while in the Net Zero scenario, the decline is likely to be in the range of 25-30 million bpd. Oil demand is expected to reach approximately 97.8 million barrels per day (b/d) by 2035, based on the current global energy system trajectory. This figure marks an upward revision of more than 5% compared to last year's forecast when BP had significantly reduced its growth expectations for both oil and gas.
Natural gas demand shows contrasting trends in the two scenarios. Under the Current Trajectory, demand should increase around 20% by 2050, driven by substantial growth in emerging economies. In the Net Zero scenario, gas demand is expected to peak mid-decade and then halve by 2050, with 80% of consumption abated through carbon capture and storage (CCS) technology. BP's forecast for natural gas demand in 2035 has also risen 3% compared to last year's projection.
The last increase in oil demand projections for 2030 occurred in 2022, while gas projections were previously raised in 2018. Despite the increased demand for fossil fuels, BP anticipates that CO2 emission levels will be lower by 2050 under both the current trajectory and net zero scenarios.
Renewable Energy
Both scenarios predict a substantial increase in renewable energy capacity. Wind and solar power are expected to grow eight-fold by 2050 in the Current Trajectory scenario and 14-fold in the Net Zero scenario. Until 2035, China and developed economies will lead the expansion, each contributing 30-45% of new capacity.
LNG Demand
Liquefied natural gas (LNG) demand is anticipated to grow rapidly until 2030, with a 40% and 30% increase in the Current Trajectory and the Net Zero scenarios, respectively, compared to the 2022 levels. Post-2030, LNG demand will continue to rise by more than 25% in the Current Trajectory, necessitating additional liquefaction capacity. However, the Net Zero scenario forecasts a reversal in gains post-2030, with global LNG trade dropping 40% below 2022 levels by 2050.
Conclusion
BP's Energy Outlook highlights the critical transitions facing the global energy landscape. While the report did not explicitly state the reasons for the revised forecasts, it noted that under the current trajectory, the decline in oil use for road transport is balanced by its increasing use in the petrochemicals industry.
In emerging economies, growing prosperity and rising living standards are expected to support robust oil demand. BP's latest outlook indicates a complex and evolving energy landscape, where the pace of the transition to renewable energy sources must accelerate to meet global targets and mitigate the potential costs of delay.
Hess is a leading oil and natural gas exploration and production company that made several world-class oil discoveries in the Stabroek Block, located off the coast of Guyana. The company is currently in the process of being acquired by supermajor Chevron in an all-stock deal worth $53 billion. The merger will likely result in the creation of an energy behemoth with a massive portfolio of producing assets.
The Zacks Consensus Estimate for HES’ 2024 EPS is pegged at $10.52. The company has a Zacks Style Score of B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value Score of A.
The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $7.29 and $7.17, respectively. The partnership has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.
SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term value for shareholders.
The Zacks Consensus Estimate for SM’s 2024 EPS is pegged at $7.15. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2025 in the past 30 days.
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BP Ups Oil & Gas Demand Forecasts Amid Slow Clean Energy Shift
BP plc (BP - Free Report) has projected that the global oil demand will peak next year, with wind and solar capacity set to expand rapidly under both main scenarios outlined in its annual Energy Outlook. The report, which studies the evolution of the global energy system up to 2050, suggests significant shifts in energy consumption patterns and carbon emissions. The energy giant highlighted these projections in its annual outlook, cautioning that a delay in the shift to renewable power could prove "costly."
Scenarios and Emissions
BP's Energy Outlook presents two scenarios — the Current Trajectory and the Net Zero scenario. Both scenarios predict that carbon emissions, predominantly from fossil fuels, will peak in the mid-2020s. The Current Trajectory scenario is based on existing climate policies and carbon reduction commitments. In contrast, the Net Zero scenario assumes stricter climate policies aligned with the Paris Agreement, aiming for a 95% reduction in carbon emissions by mid-century.
In the Current Trajectory scenario, primary energy demand continues to rise until the mid-2030s, then stabilizes. By 2050, energy demand is projected to be around 5% higher than in 2022. Conversely, the Net Zero scenario sees energy demand peaking mid-decade and declining thereafter, with a 25% reduction by 2050 compared to 2022.
Oil and Natural Gas
According to the outlook, oil demand is expected to peak around 102 million barrels per day (bpd) in 2025 under both scenarios. However, the rate of decline varies.
In the Current Trajectory, oil consumption is expected to drop to around 75 million bpd by 2050, while in the Net Zero scenario, the decline is likely to be in the range of 25-30 million bpd. Oil demand is expected to reach approximately 97.8 million barrels per day (b/d) by 2035, based on the current global energy system trajectory. This figure marks an upward revision of more than 5% compared to last year's forecast when BP had significantly reduced its growth expectations for both oil and gas.
Natural gas demand shows contrasting trends in the two scenarios. Under the Current Trajectory, demand should increase around 20% by 2050, driven by substantial growth in emerging economies. In the Net Zero scenario, gas demand is expected to peak mid-decade and then halve by 2050, with 80% of consumption abated through carbon capture and storage (CCS) technology. BP's forecast for natural gas demand in 2035 has also risen 3% compared to last year's projection.
The last increase in oil demand projections for 2030 occurred in 2022, while gas projections were previously raised in 2018. Despite the increased demand for fossil fuels, BP anticipates that CO2 emission levels will be lower by 2050 under both the current trajectory and net zero scenarios.
Renewable Energy
Both scenarios predict a substantial increase in renewable energy capacity. Wind and solar power are expected to grow eight-fold by 2050 in the Current Trajectory scenario and 14-fold in the Net Zero scenario. Until 2035, China and developed economies will lead the expansion, each contributing 30-45% of new capacity.
LNG Demand
Liquefied natural gas (LNG) demand is anticipated to grow rapidly until 2030, with a 40% and 30% increase in the Current Trajectory and the Net Zero scenarios, respectively, compared to the 2022 levels. Post-2030, LNG demand will continue to rise by more than 25% in the Current Trajectory, necessitating additional liquefaction capacity. However, the Net Zero scenario forecasts a reversal in gains post-2030, with global LNG trade dropping 40% below 2022 levels by 2050.
Conclusion
BP's Energy Outlook highlights the critical transitions facing the global energy landscape. While the report did not explicitly state the reasons for the revised forecasts, it noted that under the current trajectory, the decline in oil use for road transport is balanced by its increasing use in the petrochemicals industry.
In emerging economies, growing prosperity and rising living standards are expected to support robust oil demand. BP's latest outlook indicates a complex and evolving energy landscape, where the pace of the transition to renewable energy sources must accelerate to meet global targets and mitigate the potential costs of delay.
Zacks Rank & Key Picks
BP currently carries a Zack Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked stocks like Hess Corporation (HES - Free Report) , Sunoco LP (SUN - Free Report) and SM Energy Company (SM - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hess is a leading oil and natural gas exploration and production company that made several world-class oil discoveries in the Stabroek Block, located off the coast of Guyana. The company is currently in the process of being acquired by supermajor Chevron in an all-stock deal worth $53 billion. The merger will likely result in the creation of an energy behemoth with a massive portfolio of producing assets.
The Zacks Consensus Estimate for HES’ 2024 EPS is pegged at $10.52. The company has a Zacks Style Score of B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value Score of A.
The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $7.29 and $7.17, respectively. The partnership has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.
SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term value for shareholders.
The Zacks Consensus Estimate for SM’s 2024 EPS is pegged at $7.15. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2025 in the past 30 days.