The largest oil organizations argued about the “beginning of the end of oil”

Relations between the International Energy Agency and the world’s largest oil producer, OPEC, are heating up. IEA experts are signaling the “beginning of the end” of the fossil era, which could trigger fuel “chaos” on a planetary scale. Experts from the raw materials cartel are confident of the opposite, based on the figures: now 80% of the world’s energy balance is provided by the Earth’s underground storehouses.

For Russia, whose economy and budget remain critically dependent on hydrocarbon trade, the outcome of this dispute could be life-changing.

Demand for the main types of fossil fuels, natural gas and oil, according to IEA Executive Director Fatih Birol, will begin to decline this decade, and this process will be facilitated by the rapid development of green energy and the growth of sales of electric vehicles. In addition, the production capacities of a number of large consumer regions, in particular African countries, will by that time be able to cover up to 95% of their electricity needs from renewable sources: sun, wind and water.

OPEC, of ​​course, does not agree with these theses: representatives of the cartel note the high dependence of the world economy on the level of production and prices of traditional hydrocarbon raw materials and are not ready to admit that their energy reserves are close to exhaustion.

Based on the current situation in the global fuel market, it can be assumed that, despite the increased interest and significant growth in investments in renewable energy sources, the demand for traditional fuels – oil and gas – due to the widespread lack of modern technologies in the next decade is unlikely to decrease significantly . MK experts tried to give their assessment of the parties’ arguments and find out what Russia’s interests are in this dispute.

Artem Deev, head of the analytical department of Amarket: “The IEA represents the interests of oil importers, therefore many of the agency’s statements are of a political nature and are intended to bring down existing hydrocarbon prices. OPEC is an association of commodity exporters and is considered a “natural opponent” of the IEA. The global transition to renewable energy sources will certainly take place, but not before 2050. So far, neither the technology nor the infrastructure are ready in the world.

According to the UN, today about 80% of the world’s population lives in countries that are net importers of fossil fuels. The International Renewable Energy Agency estimates that by 2050, about 90% of the world’s electricity will come from renewable sources.

In Russia, the topic of supporting renewable energy sources will not be so relevant in the coming years. Back in 2022, the demand for electricity in our country increased by 1.5%, but in modern geopolitical and economic conditions, the authorities do not consider the global direction to be their priority. European companies were major investors in Russian renewable energy projects, but since last year they have been withdrawing from joint projects. Such a trend, of course, will slow down the development prospects of this sector of our country.

Meanwhile, Russian nuclear energy has excellent prospects, both on the domestic and foreign markets. Especially in economically growing Asia. Russia is already a leading exporter of nuclear power plant technologies. Even the USA and Europe, despite the imposed sanctions, could not refuse the services of a domestic company in this industry.

The further path of development of the global energy industry will depend on how the ongoing restructuring of the international and financial system of the global economy ends. Russia’s place in the planet’s energy ranking will not change significantly. However, the relationship with global technological trends will depend solely on our own developments: in particular, on the export of energy in digital form, for example, by providing computing processes on large servers or through cryptocurrency and a reliable energy grid.”

Alexander Shneiderman, head of the Alfa-Forex department: “In the next 25-30 years, “green” energy, although it will develop, will most likely not be able to completely replace traditional energy sources. Both types of energy will coexist in the world market. Discussions about the full development and creation of a decent nuclear infrastructure, as well as discussions about the development of technologies related to the extraction and use of fossil fuels, have been ongoing for several decades. Some green energy sources, such as solar and wind, have much lower “energy density” compared to traditional sources such as oil and gas.

This means that providing Russian energy at a global level with the help of cutting-edge technological innovations may require additional equipment and test sites for testing generating facilities. Green energy sources will always be subject to weather conditions and other independent factors, so their performance will continue to fluctuate.

Without further development of technologies for efficient energy storage and provision of a reliable transport system, neither Russia nor other global producers and consumers of energy resources will be able to move from the development of hydrocarbon deposits to the production of similar volumes of energy obtained from solar and wind generation.”

Vladimir Chernov, analyst at Freedom Finance Global: “Among the arguments for reducing demand for fossil energy resources, one can note the active development of the electric automobile industry in the two largest car markets: American and Chinese. With this development, these industries receive active support from the state in the form of tax breaks and preferential lending.

The pace of growth in this manufacturing sector of the international economy is set to accelerate in the coming years. Especially when it is possible to curb inflation in countries with developed economies, and when the central banks of the leading countries of the world move on to easing monetary policy.

The largest manufacturers of electric vehicles intend to create production, in particular, in the Indian market. The transition to electric vehicles will significantly reduce hydrocarbon consumption. However, mainly fossil energy sources are used to generate electricity, so it is necessary to increase the share of such production from renewable energy sources.

In any case, the transition to “green” energy requires colossal investments, which, given the slowdown in global economic growth, are not visible in the near future. In the next 10 years, “green” energy will be able to quite seriously displace traditional energy sources only with the support of large global investment communities, whose capital will be backed by guarantees from governments and international alliances.

At the same time, taking into account external pressure, sanctions restrictions and the transformation of the Russian economy, one should not expect rapid development of “green” energy in our country in the near future. International investors expect Moscow, first of all, to restore its role in the global market for mineral resources, taking into account the reorientation in foreign trade relations in an eastern direction. Therefore, first Russia must again become one of the leading “three” countries in global energy consumption and production in the global fuel market. The only thing left to overtake is our main allies and ill-wishers: China, India and the USA.”