One of the oil industry’s top economists has claimed oil and gas is “here to stay” and that demand for the fossil fuels will not diminish over the next 25 years.
Eirik Wærness, chief economist with Norwegian-based multinational Statoil, said there was reason to be optimistic about the future of the industry and that the current “short term pain” it was experiencing would give way to “long term gain”.
Mr Wærness, who addressed the Scottish Oil Club in Edinburgh last Thursday, said demand would remain high until at least 2040, despite a commitment by world leaders to limit the rise in global temperatures to 2 degrees Celsius.
The economist said: “The situation in oil and gas is challenging and it has last longer than we expected, particularly in terms of the gas markets.
“For oil we expect the market to start correcting slowly towards the end of the year or early next year.
“Looking at a longer term perspective, towards 2040, even in a situation where the world going towards a two degree limit on global temperature, oil and gas is here to stay and the world will need as least as much oil and gas as it uses now.”
Mr Wærness said reduction in coal consumption in order to cut CO2 emissions would lead to increased demand for oil and gas.
Meanwhile, the growth in world population and energy needs of transportation would also help keep demand up, he added.
He added: “Oil and gas are fantastic resources and we have struggled to find sources of energy as effective per kilo.”
Mr Wærness said he expects the last discoveries in the North Sea have not been made but that it was a matter of “finding a solution” for increased oil and gas recovery.
He added: “Of course both in Scotland and Norway times are extremely tough, particularly for the supply industry in terms of large numbers of jobs being cut,
“That is going to last for a while and cost efficiencies mean it is going to take a while to get the jobs back.
“The good news is that the current situation in prices is not sustainable and that it will come back up.”
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Dr Richard Dixon, director of Friends of the Earth Scotland, said predictions on long term demand for oil and gas risked looking “ridiculous” given technological and political advances to reduce reliance on fossil fuels.
He said: “If we are serious about the two degree limit, we can’t possibly afford to continue to use fossil fuels at the rate we are.
“People are really starting to take climate chance seriously. I am optimistic in technology moving quickly and the political forces we now have moving against fossil fuels.”