Brent Crude oil prices could fall to $10 per barrel by 2050 if the world accelerates the energy transition with decisive action to achieve the Paris Agreement climate goals, energy consultancy Wood Mackenzie said on Thursday, RT reported.
The scale of change if the world moves on track to limit global warming to 2 degrees Celsius would be so great that it would revolutionize the energy industry and sink demand for oil, the power of major oil producers, and oil prices, according to WoodMac.
Still, the consultancy’s Accelerated Energy Transition Scenario (AET-2) is just one of many scenarios for the future of global energy systems and not the base-case scenario, Wood Mackenzie noted.
Under the AET-2 scenario, global oil demand is expected to drop significantly and lead to a significant decline in oil prices. OPEC will likely have a market share of over 50 percent by 2050, but less control over the market because of the steep fall in demand, according to WoodMac. The low-cost producers in the Middle East would still be the main oil suppliers to the world, but prices could be as low as $10 a barrel Brent.
Although the scenario is neither a prediction nor a base-case scenario, the oil industry should not be complacent about the scale of change that would come from the energy transition, said Ann-Louise Hittle, vice president, Macro Oils, at Wood Mackenzie.
“The risks associated with robust climate-change policy and rapidly changing technology are too great,” Hittle noted.
Both Big Oil and the national oil companies (NOCs) will be severely impacted in case the world acts aggressively to put global warming under control and reach the goals of the Paris Agreement, Wood Mackenzie says.
“Our scenario would see the end of Big Oil and the rise of Big Energy. Financially strong integrated companies step up their investment plans to supplement dwindling upstream revenue with new cash flow from renewables, hydrogen and CCS,” the consultancy said.
Major international oil companies have already said they would invest more in low-carbon energy, including in hydrogen, carbon capture, and electricity from renewables, but most rely on cash flows from oil and gas operations to allocate more investments to low-emission energy solutions.