Nov. 4, 2016 4:19 AM ET
- Royal Dutch Shell CFO Simon Henry just forecast that global demand for oil could peak within the next 5 to 15 years and then decline.
- This is surprising coming from an oil company executive, and runs counter to typical industry projections such as ExxonMobil’s that demand will grow 20% by 2040.
- Shell will shift their focus to natural gas, biofuels, and hydrogen, in order to be “the energy major of the 2050s”.
- I like Shell’s perspective a lot: It gives them multiple paths to success. Of course they will still be just fine if oil demand does keep growing.
- But if Shell is right, they will be ready and their management decisions over the next 5 to 15 years will be two steps ahead of everyone else’s.
On its earnings conference call this week, Royal Dutch Shell (NYSE: RDS.A) (NYSE: RDS.B) made a suprising commentary on its perspective for the global oil market over the next two decades: Its CFO Simon Henry forecast that global demand for oil could peak within the next 5 to 15 years and then decline.
Such an apparently pessimistic and bearish forecast is not what you usually expect to hear from a major oil company executive, to say the least. As the article pointed out, ExxonMobil’s (NYSE:XOM) annual outlook makes a more typical projection for the industry: about a 20% increase in global oil demand from 2014 to 2040.