No quick fix for challenges facing oil majors: BP chief
Global oil companies are facing the twin challenges of an abundance in supply coupled with pressure to reduce carbon emissions and there is no "quick fix" solution, the chief executive of BP said on Wednesday.
BP chief executive Bob Dudley said only a combination of strategies would help oil majors deal with the challenges, as they come to terms with a period of prolonged low oil prices.
Dudley argued that while global oil demand was still expected to rise by one third in the next decades, "what is new is the increase in supply", especially due to the exploitation of US shale reserves.
"We now have abundant supply. It's a fact of life," he told the World Petroleum Congress (WPC) in Istanbul.
The supply has pushed down crude prices to their current level of around $45 a barrel and Dudley noted that at the time of the last WPC gathering of energy bosses in Moscow in 2014, the oil price had been $108. "We have half a century's worth of oil and gas in our proved reserves alone. And there is much more out there," he said, pointing to untapped shale reserves in Argentina, Algeria and China.
Meanwhile, after the Paris Agreement on combatting climate change set targets for reducing emissions, oil majors need to "make our business fit for a low carbon world", he said.
"These are two huge challenges. There are no quick fixes, no overnight solutions," said Dudley.
"History shows our industry has taken on these kind of challenges many times before and succeeded," he said.
He warned against a "replay" of past solutions. "These new questions need new answers," he said.
Dudley said solutions would come from oil companies showing excellence, reliability and safety in their operations.
BP learnt "a lot of lessons" since the 2010 Deepwater Horizon oil spill disaster, Dudley said. Companies must also make sure resources were sustainable through using natural gas and renewables in the energy mix.
Growth in renewables is surging, he said, while adding, that "common sense tells us reducing emissions cannot depend on renewables alone".
Dudley said this underlined the "the advantages of gas" in bringing an abundant and relatively clean energy source to consumers.
"There is a an energy transition underway and we are going to be part of it," he said.