The crude oil era is set for a structural slowdown leading to significant implications for different stakeholders in the oil & gas, said ICRA in a recent study.
In its report, ICRA said crude oil, since its emergence in early 1900s, is witnessing a steady rise in usage to about 45% of global energy consumption by mid-1970s. Subsequently it reduced to 30% due to the emergence of other energy sources notably natural gas, it continues to be a fuel to reckon with among policy makers.
At present disruptive potential for oil consumption levels comes from environmental concerns, car-pooling, electric cars, solar power, LNG based commercial vehicles, advent of e-rickshaws, e-bikes and driver-less cars.
K Ravichandran, senior vice president and group head, corporate sector ratings said: “Electric or battery-driven vehicles are a key threat for demand of auto-fuels. The battery cost of an electric vehicle, accounting for almost one-third of the total cost of such vehicles will remain a key determinant in the rate of acceptance of electric vehicles.”
“With anticipated material fall in battery costs, the break-even crude price for electric cars is expected to decrease from $185 per barrel to to $75per ICRA’s estimates,” he said.
LNG based trucks and buses are likely to make a large dent in crude usage. Such vehicles would help reduce pollution from diesel leading to lower operating expenses offsetting higher capital costs.
“As per ICRA estimates, break-even period for a truck would range 1-2.5 years depending upon taxation on LNG. However, developing an LNG-based transport fuel market shall have its own challenges, especially in building a network of fuelling stations to ensure the supply of LNG, when most of the trucks and buses on the road are powered by diesel or petrol engines.” said Ravichandran.
Additionally, consistent fall in solar module prices leading to material fall in solar power tariffs have led to material increase in competitiveness against power plants based on liquid fuels, and the trend is likely to continue.
Besides, replacement of diesel, by natural gas or LNG primarily for back-up power generation would also impact the demand of petroleum products. Dwayne Allen JerseyShare This