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Page added on November 12, 2018
There will be an oil shortage in the 2020s, Goldman Sachs says
An oil shortage is coming says Goldman Sachs, because firms cannot fully invest in future production.
Global oil majors are increasingly looking to invest in lower-carbon areas of the energy sector, as they react to pressure for cleaner energy, both from government policy and investors.
“In the 2020’s we are going to have a clear physical shortage of oil because nobody is allowed to fully invest in future oil production,” Michele Della Vigna, Head of EMEA Natural Resources Research at Goldman Sachs told CNBC Friday.
“The low carbon transition will come through higher, not lower oil prices,” he told CNBC’s “Squawk Box Europe.”
Della Vigna said “Big Oils” are starting to understand that if they want to be widely owned by investors, they need to show that they are serious about minimizing the amount of carbon in the atmosphere.
The Goldman analyst said oil firms only had to look at the steep derating of coal companies over the last 5 years to understand the shift in investor sentiment.
Della Vigna said until a transition to full renewables is made, the interim battle will be to own a greater market share of gas-based power. The analyst said with a huge capital cost of gas infrastructure, big state-backed companies looked best placed.
“We talk about the new seven sisters emerging, dominating the global oil and gas market because nobody else can finance these mega-projects,” he said.
The “new Seven Sisters” of oil are considered the most influential firms from countries outside the Organisation for Economic Co-operation and Development (OECD).
They have been identified as Saudi Aramco, Russia’s Gazprom, NIOC of Iran, China National Petroleum Corp, Brazil’s Petrobras, Venezuela’s PDVSA, and Petronas of Malaysia. The original “Seven Sisters” were firms in the 1950s who would later consolidate to become BP, Chevron, Shell, Exxon Mobil and Royal Dutch Shell.
Della Vigna said European oil companies such as U.K. firm Shell and French company Total are also ahead of U.S. rivals in making the transition from “big oil” to become “big energy”.
Oil markets have been weak in recent days as oversupply concerns and fears of an economic slowdown have pressured prices. Both Brent and WTI contracts entered bear markets this week as prices fell around 20 percent from their most recent highs in October.
61 Comments on "There will be an oil shortage in the 2020s, Goldman Sachs says"
Davy on Thu, 15th Nov 2018 6:34 am
Demand destruction anyone?
“Kyle Bass Doubles-Down On Yuan Short, Calls For “China Reset”
https://tinyurl.com/yaf9wmgj
“Bass, who has long argued that the yuan will slide 30% against the dollar as the country’s credit bubble bursts, told his audience that he has added to his currency short as the currency hovers just above the big round 7-to-the-dollar level. He also praised President Trump’s trade policies, which he said would be “100% healthy for the next 10 years”, though he clarified that he was “not a Trump voter” and that he would jump at the opportunity to throw his support behind Michael Bloomberg. “Tariffs come and go,” Bass said. “But how do you negotiate with someone…with the hopes that they would liberalize their economy and do the things they said they would do, and especially don’t do the things they said they wouldn’t do, and yet they’ve done everything exactly as they always have?”
“‘Trade wars are good,’ that was an insane comment to say,” Bass said of Trump. “What he should have said is, ‘We’re going to reciprocate with China, where they’re going to let us into their markets, we’re going to let them into ours…’ His actions were proper, but his comments were improper.”
“As corporate defaults soar, Bass believes that China is headed for a “reset” that he expects to arrive during “the next couple of years.” He projected that China could lose more than $2.5 trillion of equity, more than triple the size of the U.S bank bailout during the 2008 financial crisis, and would have to print more than $25 trillion of renmimbi to counteract the impact of slowing economic growth and declining credit on its banks. “It’s insane how levered this market has become,” Bass said. “You’re starting to see bankruptcies across the board in China that are hard to hide, if you look at the corporate default rate, the bankruptcy rate, M1 and M2 (money supply), the slowest money growth in over four decades.” “We’ll have a reset in China, and I think it will happen in the next couple of years,” Bass concluded. Chinese companies are already feeling the impact of its slowing credit impulse…”
Antius on Thu, 15th Nov 2018 6:54 am
“BTW: The US has no missiles or systems that can take down Russia’s newest. You are supporting a worn out, antique military.”
The US never has had a missile defence system that would have been effective against ICBM attack, especially an attack carried out by multiple missiles simultaneously. No country has and no country will have any time soon. Both Regan and Bush junior tinkered with the idea, but both programmes were defeated by the enormous costs involved. Defence is based upon the doctrine of mutually assured destruction.
Secondly, all ICBMs are hypersonic, in the sense that the warheads follow a suborbital trajectory with a speed of about 10,000mph. That is implicit to the way that they work. It isn’t a new thing. Intercontinental ballistic missiles have been around since the 1960s. The space programme that took men to the moon was a spin-off of the US programme to develop intercontinental (hyper-sonic, if you prefer) missiles. It is quite old technology now.
It is extraordinarily difficult to destroy a compact object moving at that speed. To make the task even more challenging, each missile carries multiple independent warheads (MIRVs). Really, the only option of intercepting it would be high-power lasers fired from orbit. For this reason, there is very little strategic benefit to developing anything new.
I AM THE MOB on Thu, 15th Nov 2018 8:16 am
Davy
The global economy doesn’t really effect oil demand very much..The only time in the last 100 years oil demand slowed down was after the great recession..The problem is population and when you add another one billion people on average every 12 years..Oil demand never stops..So buckle up you pussy.
Its obvious between you and me who is the self made working man and who is the trust fund baby..
Davy on Thu, 15th Nov 2018 8:48 am
“The global economy doesn’t really effect oil demand very much”
AH, way what? (like you kids say). We saw a significant drop in demand post 08. The biggest possible impactor of oil demand is the economy. If the economy ever has sustain and broad decline oil consumption will likely drop considerably. So will renewables and BEV market penetration. All energy types and vectors will be impacted. You can take that to the bank.
“The problem is population and when you add another one billion people on average every 12 years..Oil demand never stops..So buckle up you pussy.”
Without sustainable development that a strong global economy delivers oil demand at some point is going to fall. This is especially true with debt levels and the expense of bringing unconventionals to the energy mix.
“Its obvious between you and me who is the self made working man and who is the trust fund baby..”
You are an unemployed millennial that has likely never worked an honest day in your life. You are a liar concerning your credentials. Why is it you don’t talk about your PHD in Chemistry anymore? That was an obvious lie. I am a trust fund giver dumbass. I have a trust set up for my kids because I was successful with my life. It is a modest trust but it is real. I think of all the regulars here you are one of the most disgusting. Why are you not talking much about killing whities and breeding their daughters anymore? Maybe you see how stupid that sounds when you crave respectability. You are one warped piece of shit that should have been aborted.
I AM THE MOB on Thu, 15th Nov 2018 9:09 am
Davy
I have worked since I was 13..I worked on farms where you don’t have to be of legal age..I worked my way through college and earned by education..And then I worked for a fortune 500 company and was the top salesman in my state for three years in a row..I went on several all expense paid vacations for it..And then I got a job at a Midwestern university as a research scientist..
I made it the hard way..Unlike a trust fund baby like you..
Davy on Thu, 15th Nov 2018 9:37 am
MOB, when you lie this calls into question everything you say…PHD in chemistry…were you drinking when you spouted that off? I think you are full of shit and the reason I say this is the degree to which you are always complimenting yourself and stressing your credentials. You are trying way too hard to impress. Let’s say it is true and you have done the things you said then there is nothing to be boastful about. These were normal activities of my generation. We worked for very little when I was younger even with degrees starting out. We were not spoiled and lost like you millennials are today. You and anonymouse are perfect examples of waste cases.
I AM THE MOB on Thu, 15th Nov 2018 9:37 am
BJ
Just call him Davy the “trust fund baby”..
LMFAO!
rockman on Thu, 15th Nov 2018 10:46 am
As pointed out many times there has always been an “oil shortage”. Even when oil dropped to $30/bbl there were hundreds of millions who could not buy much or any oil. Same true when global production hit 100 million bopd. Such articles are written from the perspective of oil consumers who can currently afford as much oil as they require REGARDLESS of the price of oil. Which, common sense should tell anyone, is a very small minority of the oil consumers around the world.
Duncan Idaho on Thu, 15th Nov 2018 11:13 am
“As pointed out many times there has always been an “oil shortage””
Not really, distribution problems.
2019 we may actually have a oil shortage- a new experience for us humans.
I AM THE MOB on Thu, 15th Nov 2018 11:31 am
J.C. Penney Could be in Danger of Following Sears Into Bankruptcy
https://www.cnn.com/2018/11/14/business/jcpenney-future/index.html?fbclid=IwAR2d3FLk9vi5DcJ9PdB2H7nytMCvBxKxmc70HO6NAD4nj3WAK-9XiH81MXE
I AM THE MOB on Thu, 15th Nov 2018 12:53 pm
China’s coming recession has pushed oil below $60
The Chinese “economic miracle” is built on a mountain of debt. As Chinese GDP grew over 12-fold in 20 years to $12.24 trillion at the end of 2017, credit in the Chinese financial system grew over 40-fold, taking the debt-to-GDP ratio from 100% to 400%, if one counts the shadow banking system. Shadow banking credit aggregates are omitted from official statistics, but they add at a minimum 100% to the total debt to GDP ratio for China (see this Brookings Institution paper).
https://www.marketwatch.com/story/chinas-coming-recession-has-pushed-oil-below-60-2018-11-13?link=sfmw_fb