Vitol Expects Oil Demand to Remain Robust Until 2040

By Irina Slav - Feb 03, 2025

Crude oil demand will remain at current levels over the next 15 years at least, commodity trading major Vitol has forecast, shattering earlier predictions from outlets such as the International Energy Agency that has consistently been predicting peak oil demand growth before 2030.

Demand for crude is set to rise further in the coming years, to peak at around 110 million barrels daily, the commodity giant said in its long-term report, adding that after it reaches that peak, it would begin declining, to reach the current level of daily average demand at 105 million bpd in 2040.

To compare, the International Energy Agency expects crude oil demand to peak at a little over 105 million barrels daily in four years. BP is also a lot more pessimistic about demand than Vitol expecting the daily average to peak around the end of the decade and gradually decline to just 91.4 million barrels daily by 2040, the Financial Times noted in a report on Vitol’s forecast. The FT added, however, that the BP forecast was a 6% increase on earlier predictions for oil demand developments, suggesting the supermajor is acknowledging the realities of the energy transition rather than the hopes and plans.

Vitol’s forecast, however, does not mean that the transition has stopped, with the commodity trader pointing out that gasoline demand will decline under the onslaught of electric vehicles—admittedly mostly in China—but the loss of gasoline demand would be offset by demand for petrochemicals.

Vitol’s analysts expect petrochemicals demand to add some 6 million barrels daily by 2040 when it would come to account for 20% of all crude oil consumed globally. Meanwhile, gasoline demand is seen declining by 4.5 million barrels daily over the next 15 years. Liquefied petroleum gas demand is also set for growth over the next decade and a half, Vitol said.

By Irina Slav for Oilprice.com

 

Goldman Sachs: U.S. Tariffs Will Have Short-Lived Limited Impact on Oil Prices

By Tsvetana Paraskova - Feb 03, 2025

International oil and gas prices will see a limited short-term impact from President Trump’s new tariffs on Canada, Mexico, and China, according to Goldman Sachs.

On Saturday, the U.S. Administration announced that additional tariffs would be implemented on February 4 on these countries. Canada and Mexico face 25% tariffs, with Canadian energy slapped with a lower, 10%, tariff. China, for its part, faces an additional 10% tariff across the board.

Despite President Trump’s move, Goldman Sachs kept its oil price forecasts for this year and next unchanged, as it expects minimal impact on global oil prices in the immediate term due to stable oil supply. Moreover, Canadian tariffs have mostly been priced in already, the investment bank said in a note carried by Reuters.

However, Goldman Sachs expects near-term pain for gasoline prices, especially in the U.S. Midwest, where many refineries rely on Canadian crude.

“Canadian oil producers are expected to eventually bear most of the burden of the tariff with a $3 to $4 a barrel wider-than-normal discount on Canadian crude given limited alternative export markets, with U.S. consumers of refined products bearing the remaining $2 to $3 a barrel burden,” the Wall Street bank said.

“Canadian oil tariffs would risk unpopular, if temporary, gasoline price increases in the US Midwest,” Goldman Sachs analysts wrote in a recent note quoted by Bloomberg.

Following the tariff announcement, oil prices jumped in Asian trade on Monday.

But this kneejerk reaction in the near term could turn into much lower oil prices in the medium term if full-blown trade wars depress economies, analysts say.

“While the initial move on crude oil is upward, a cycle of tariffs and retaliatory actions by Canada, Mexico, China and perhaps others in the future could lead to a worldwide recession, causing oil prices to plummet,” Andy Lipow, President of Lipow Oil Associates told CNBC, commenting on the opening salvo in what could be a new trade war.

By Tsvetana Paraskova for Oilprice.com

 

South Korea Found to Have 14 Additional Offshore Oil and Gas Prospects

By Tsvetana Paraskova - Feb 03, 2025

The U.S. geoscience exploration firm working in South Korea’s East Sea has discovered 14 additional oil and gas prospects in the area, South Korean officials said on Monday.

U.S. exploration firm Act-Geo has said in a report to the Korea National Oil Corp. (KNOC) that it had detected these possible resources, the South Korean Yonhap news agency reported, quoting officials from KNOC and the Ministry of Trade, Industry and Energy.

According to Act-Geo, 14 additional oil and gas prospects could be found in the East Sea, with potential deposits of between 680 million barrels and 5.17 billion barrels of oil and gas equivalent, the Korean officials said.

The company’s findings are preliminary and are yet to be confirmed by more experts, the officials added.

Last year, Act-Geo said that exploration prospects offshore South Korea have great potential and a future discovery is “highly prospective.”

In June 2024, South Korea endorsed a plan for drilling off the east coast of one of the world’s largest oil and gas importers, to explore what studies say are potentially vast resources of crude oil and natural gas.    

The area could contain 14 billion barrels of oil and gas, the country’s top officials said at the time.

Vitor Abreu, co-founder and adviser of Act-Geo, said last year that the initial survey results had already attracted the attention of “important international companies.”

South Korea hopes to find resources by the middle of this year. Commercial production is targeted for 2035 for the exploratory prospects, the larger part of which are estimated to contain natural gas.

South Korea imports nearly all the fossil fuels it consumes, so domestic production of oil and gas could go a long way to meet some of the demand.

The country is the fourth-largest importer of crude oil and natural gas in the world, KNOC says. South Korea is also the world’s ninth-biggest energy consumer.

By Tsvetana Paraskova for Oilprice.com

 

South African Minister Says Coal Is Critical Mineral for the Country

By Tsvetana Paraskova - Feb 03, 2025

South Africa should look at coal as a critical mineral because of its importance to the country’s economy and employment, Mineral Resources Minister Gwede Mantashe said on Monday.

South Africa, one of the world’s largest coal producers and exporters, continues to rely on coal for a large part of its energy mix. Currently, some 85% of South Africa’s electricity is generated at coal-fired power stations.

Despite efforts to boost the share of renewables in its power mix, South Africa continues to rely on coal, also because it is seeking billions of U.S. dollars in support from international lenders and partners for its Just Transition plan.

“In our assessment, coal is one of the critical minerals,” the mineral resources minister said at a mining conference in Cape Town today, as carried by Bloomberg.

“King coal is back,” the minister added.

At the end of last year, the High Court of South Africa ruled that government plans for new coal-fired power capacity are unlawful as they violate the constitutional right to health.

South Africa’s government has planned to seek 1.5 gigawatts (GW) of new coal-fired electricity capacity. But the plans have been challenged in court by activists who argued that new coal plants could lead to damages to public health.

Upholding the challenge brought up by three environmental groups, the High Court says that the government plans and decisions to seek the procurement of new coal power are “unlawful and invalid,” Judge C.J. van der Westhuizen wrote in a ruling in December.

South Africa could see an additional up to 50,000 deaths due to air pollution and billions of U.S. dollars in health costs if a proposal to delay the decommissioning of coal-fired power plants goes through, a Finland-based Centre for Research on Energy and Clean Air (CREA) said earlier in 2024.

By Tsvetana Paraskova for Oilprice.com

 

Libya Is Preparing for a Clean Energy Boom

By Felicity Bradstock - Feb 01, 2025

• Libya's oil production has declined significantly due to political instability.
• 
  
• The government aims to diversify its energy mix and invest in solar and wind power.
• 
  
• Libya's vast desert areas offer great potential for renewable energy projects.
• 
  

Libya’s energy sector has had a turbulent few years, owing to political unrest and a significant shift in foreign investment in its oil and gas sector. While its fossil fuel industry is struggling to rebound to its former glory, there is significant potential for the development of the North African country’s renewable energy sector. Its large desert terrain shows great potential for the development of solar and wind energy projects, and the government has shown greater commitment to decarbonization and a green transition in recent years, which higher levels of foreign investment could help Libya achieve.  

Libya has long been known as a major oil and gas power, pumping almost 3.4 million bpd during its peak production period in the 1970s. However, its crude output has fallen significantly, to around 32 percent of its peak, placing it at around 18th in the world for production. The government now aims to produce 2 million bpd by 2030, after falling short of its ambitious target of 2.2 million bpd by 2023 largely due to several years of political unrest and poor governance.

Since the overthrow of Libya’s leader Qaddafi in 2011, several groups have vied for political power. Now, the Government of National Stability (GNS), which is backed by Egypt, Russia and the United Arab Emirates, holds sway over the eastern and southwestern regions, where most of Libya’s oil fields are located, and the Government of National Unity (GNU), supported by Turkey, several Western powers, and endorsed by the UN, controls the capital of Tripoli. The GNS, has control of key terminals, such as Es Sider and Ras Lanuf, accounting for 42 percent of Libya’s oil export capacity. Meanwhile, the GNU controls two export facilities, Zawiya and Mellitah, which contribute 28 percent of Libya’s oil exports. Both powers have staged blockades or production shutdowns, which have hindered oil output and discouraged foreign powers from investing in the country’s fossil fuel industry. 

Despite Libya’s huge oil potential, the ongoing political conflict and the lack of interest from foreign investors have revealed the need to diversify the country’s energy mix. Oil continues to contribute around 98 percent of its government revenues and 60 percent of its GDP, showing that Libya has an overreliance on fossil fuels and could benefit from greater economic diversification. In addition, the development of a strong renewable energy sector could help the North African country to ensure its energy security in the future. 

In 2013, the Libyan government announced its Renewable Energy Strategic 2013-2025 Plan, intending to achieve a 7 percent renewable energy contribution to the electric energy mix by 2020 and 10 percent by 2025. The plan focused on the development of the country’s wind and solar energy capacity. Around 88 percent of Libya’s terrain is desert, with significant potential for the development of solar power projects.

At present, the construction firm PowerChina is working with the French utility EDF to develop a 1,500 MW solar plant in the east of the country. Meanwhile, France’s TotalEnergies is constructing a 500 MW solar plant in Al-Sadada. In addition, GECOL and AG Energy are building a 200 MW solar plant in Ghadames, and the Libyan General Electric Company (GECOL) is also working with Alpha Dubai Holding to develop two more solar plants, with a combined capacity of 2 GW. 

In January, Libya’s government signed a Memorandum of Understanding (MoU) with Turkey for cooperation in the field of renewable energy. Abdusselam Elansari, the head of the Renewable Energy Authority of Libya, stated, “We are cooperating with different Turkish companies in terms of electricity, power and renewable energy.” Elansari added, “We have started a capacity-building program to train our people with a Turkish company in the field of human resources, renewable energy, technical renewable energy, electricity connection, performance excellence and other sectors of cooperation”

Meanwhile, Osama El Durrat, advisor to the Libyan Prime Minister for electricity and renewable energy affairs, said that Libya is assessing the possibility of connecting its power grid with neighboring countries. El Durrat stated, “A committee is being formed to advance cross-border electricity interconnections. We have signed agreements with several southern European and Mediterranean countries. As for Turkey, we believe the connection could be facilitated through a neighboring country, enabling energy transfer between Libya and Turkey.”

Libya’s significant renewable energy potential could help garner more interest from international energy companies looking to invest in the region. In 2023, Italian firm Eni signed an MoU with Libya to identify opportunities to decrease greenhouse gas emissions and develop the country’s renewable energy capacity, to support the government’s decarbonization and green transition targets. As the government shows greater interest in the development of a green energy sector, higher levels of foreign investment could help Libya accelerate the expansion of its renewable energy sector, contributing to economic diversification and long-term energy security. 

By Felicity Bradstock for Oilprice.com

BEATING AMERIKA

China Hits Clean Energy Goal Six Years Ahead of Schedule

By Tsvetana Paraskova - Feb 01, 2025

• Chinese capacity installations of solar and wind power jumped last year.
• 
  
• In 2024, China remained the single biggest market for low-carbon energy investment.
• 
  
• This year, growth in China’s clean energy capacity is set to further accelerate as large-scale wind, solar, and nuclear projects race to finish before the 14th five-year plan period comes to an end.
• 
  

A record pace of installations of solar and wind power in recent years has helped China achieve its 2030 renewable energy capacity target six years ahead of schedule.   

China, the world’s biggest emissions polluter, set in 2020 a goal to have at least 1,200 gigawatts (GW) of solar and wind capacity by 2030.

China has already hit that target—just four years after it was set and six years early.

Government support for renewables and domestic manufacturers flooding the market with cheap components and equipment allowed the country to install record solar and wind capacity in each of the past two years.

Chinese capacity installations of solar and wind power jumped last year as the country continued to lead in global additions and beat its own record of annual installations.

Last year, China’s solar power generation capacity surged by 45.2%, while wind power generation capacity rose by 18% compared to 2023, data from the country’s National Energy Administration showed.

The jump in installed solar and wind capacity topped the overall increase of 14.6% of total installed power generation capacity in the world’s second-biggest economy.

By adding about 277 GW of solar capacity and another 80 GW of wind capacity in 2024, China beat its own record of annual renewable capacity additions.

At the end of 2024, China connected one of the world’s largest solar power projects by capacity to the grid. The Ruoqiang PV project is a giant 4-GW solar project in the southeastern part of the Taklamakan Desert, developed and operated by China Green Electricity Investment.

The solar project is part of the Chinese government’s plan to have its emissions peak by the end of the decade.

At the end of last year, China was already on track for another record-breaking year for solar capacity additions.

In 2024, China remained the single biggest market for low-carbon energy investment, BloombergNEF said in a report this week. The country attracted $818 billion of investment in clean energy solutions last year, up by 20% from 2023.

China’s total investment was greater than the combined investment of the U.S., the EU, and the UK, while investment growth in China was equivalent to two-thirds of the total global increase last year, BloombergNEF said.

As early as June 2024, Chinese wind and solar energy collectively eclipsed coal in capacity for the first time ever, according to data from the country’s National Energy Administration (NEA).

By 2026, solar capacity alone is set to top coal as China’s primary energy source, with a cumulative solar capacity of more than 1.38 terawatts (TW)—150 GW more than coal, research firm Rystad Energy said last year.

“We’re at a pivotal moment for both China and the global energy transition. With strong renewable energy project pipelines in place, the country is on track to shed its reputation as the world’s largest greenhouse gas emitter and power consumer,” said Simeng Deng, Senior Analyst at Rystad Energy.

China’s CO2 emissions are estimated to have risen by 0.8% in 2024 from a year earlier. But the emissions increase in the first quarter was partly offset by plateauing emissions since February 2024 due to the massive surge of clean energy installations and weaker-than-expected economy, according to a new analysis by the Centre for Research on Energy and Clean Air (CREA) for Carbon Brief.

China will be the biggest factor in global renewable installations and emission trends. Beijing’s new commitments under the Paris Agreement and the next five-year plan expected this year will strongly influence these, Carbon Brief said.   

This year, growth in China’s clean energy capacity is set to further accelerate as large-scale wind, solar, and nuclear projects race to finish before the 14th five-year plan period comes to an end, Carbon Brief noted.

Despite the renewables boom, coal is still king in China.

The persistent growth in Chinese coal demand, including for power generation, goes to show that coal remains the baseload of China’s power system to back up the surge in renewables and will stay such for years to come as power demand jumps with the increasing electrification of homes and transport

By Tsvetana Paraskova for Oilprice.com

Combating Climate Change with Ancient Aquaculture

By Haley Zaremba - Feb 02, 2025

• Seaweed farms can effectively capture and store carbon in the seabed, potentially doubling the carbon storage capacity of surrounding areas.
• 
  
• This natural carbon sequestration process not only helps mitigate climate change but also enhances the resilience of our oceans.
• 
  
• Seaweed aquaculture, already a booming industry, offers a sustainable and scalable solution with multiple environmental and economic benefits.

Nature offers the best carbon storage technology the world has to offer. Natural resources such as forests, grasslands, soil, oceans and other bodies of water naturally absorb and store carbon, serving as massive carbon sinks for our planet. Optimizing these natural, passive processes offers the most efficient and cost-effective form of carbon storage. Planting a forest, for example, costs far less than building a farm of carbon-storing machinery, and it also offers a plethora of other positive environmental externalities. 

For this reason, scientists have long studied these naturally occurring processes to learn about how we can take advantage of and even enhance them to meet global climate goals. Achieving the legally binding goals set out in the Paris agreement – which aims to limit global warming to 1.5º Celsius above pre-industrial averages – will not only require the rapid expansion of clean energy, but also major gains in removing the carbon that we’ve already put into the atmosphere, and then storing it somewhere that it would be causing further harm to the environment. 

A new study shows that seaweed farms could be a promising solution to this challenge. A new study published this month in the scientific journal Nature Climate Change shows that seaweed farms can pull carbon out of the water around them and store it in the seabed below. When the carbon-rich plants die, they fall to the ocean floor and are quickly buried deeply, where they can hold on to that carbon for decades or even centuries. As a result, the study found that the amount of carbon stored under the seaweed farms was about twice as much as nearby sediment beds without seaweed farming operations. 

The potential of seaweed farms to suck carbon out of seawater, another natural carbon sink, could be great news for the resilience of our oceans. As reported by phys.org, this phenomenon could “presumably allow the world's oceans to absorb more atmospheric carbon without causing catastrophic side effects such as global coral die-offs.”

Not only could this have hugely positive implications for the carbon storage capacities of our oceans, the study also found that the technology only gets better with age. The study looked at 20 seaweed farms around the world with a wide range of ages and sizes, and found that older farms were able to absorb and store more carbon. Amazingly, the oldest farm included in the study has been operational for 300 years. The older farms were able to sequester up to 140 metric tons of carbon per hectare, making the seaweed farms as successful at carbon storage as ‘Blue Carbon habitats’ such as mangrove forests. 

As luck would have it, seaweed aquaculture is already a booming industry. Today, the industry is a $16.7 billion market, with the lion’s share of production (about 80%) taking place in China and Indonesia. Not only does seaweed farming provide economic gains and food security – especially in Asian cultures where seaweed is a common part of the average diet – scientists are continually discovering more and more positive environmental externalities associated with the centuries-old practice. 

According to the Nature Conservancy, “as it grows, seaweed absorbs nitrogen from the water, nitrogen that could otherwise contribute to the growth of algal blooms that gobble up oxygen and create ‘dead zones’ where other aquatic life can’t survive.” And now we know that along with all that nitrogen these farms are sucking up an extremely helpful amount of carbon as well.

However, the Nature Conservancy notes that “the sequestration potential of farmed seaweed is highly variable.” Since the seaweed is being grown for consumption in one way or another, the vast majority of farmed seaweed does not naturally decay and fall to the ocean floor, where it can sequester carbon in the seabed. Instead, that carbon is being cycled back out into the world. 

By Haley Zaremba for Oilprice.com