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ONGC Chairman: Fossil fuels will continue to play dominant role for decades

India is the world’s 3rd-largest energy consuming country. Energy use has doubled since 2000, with 80% of demand still being met by coal, oil and solid biomass

ONGC Chairman: Fossil fuels will continue to play dominant role for decades

New Delhi, October 25 - Neftegaz.RU. Fossil fuels will continue to remain significant in the global energy basket even with accelerated adoption of renewables but the oil companies will have to develop less risky models going forward, Indian ONGC Chairman Subhash Kumar has said, reported.

Speaking at the Economic Times Global Townhall, Kumar said these days there is a discussion about the pathways different sources of energy may take over the coming decades.
There is a perception that renewable sources of energy may soon end the oil era.
He said:
  • However, according to the recent analysis by many specialists in the sevtor, even with an accelerated development of renewable sources, the fossil fuels will continue to play a dominant role in global economy for several decades to come
  • I also believe that this is likely to be the scenario
Kumar also added that the structured shift in consumption, rising living standards and a growing middle class, particularly in China and India, will be the demand drivers for oil and gas and as far as India is concerned, it is projected that the oil demand will rise at the fastest pace in the world to reach about 10 million barrels a day by 2030, almost double of the consumption in 2020.

Also, natural gas consumption is projected to witness a bigger rise, at a CAGR of 4.18 percentage points to 143.08 million tonnes by 2040, as opposed to 58.10 million tonnes in 2018.
He said:
  • Thus, the oil industry is expected to remain important and relevant in the coming years
  • No doubt, the oil industry itself will have to be financial institutions, to adopt better environmental, social and governance practices, which is emerging as a key business context
He also said that the rate of adoption of electric vehicles could be a driver in curbing the oil demand in transport sector which is a major consuming source for oil.
Also, the policies and measures adopted by governments ascross the world towards achieving net zero targets will have a profound impact on future of oil economy, both in relation to its operations as well as demand of its products.

The oil corporations, especially the NOCs, had the mandate to focus on their primary role of exploration and production of oil & gas but the cyclical nature of oil prices poses a heavy business risk on such standalone E&P companies, Kumar said.
He noted:
  • Hence, the less riskier integrated model, with proportionate upstream, refining and marketing assets, is becoming the norm. ONGC Group has also integrated across the Hydrocarbon value chain and now has its presence in upstream, refining and downstream assets almost with 1:1:1 ratio
The integrated model has become the predominant business model across the globe, not only for international oil companies like ExxonMobil, BP and Total but also for NOCs like Saudi Aramco, Statoil and Petrobras.

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