Oil & gas to remain top global energy source for next 25 yrs: Deloitte

India needs to consider change in pattern of growth in the demand for Oil

Oil is viewed as a global, unified measure of the economic recovery—and while economic indicators have been bearish of late, oil prices are still trending upward. The 2011 Oil & Gas Reality Check report, issued by Deloitte’s Global Energy & Resources group, analyzes the oil and gas trends and issues for the year ahead—the future of deepwater drilling, where the next alternative energy source will be found, and the growing influence of Asia on the industry.

This is the second year that the Global Energy & Resources group has produced the Oil & Gas Reality Check. The report is developed using in-depth interviews with clients, energy industry analysts, and the Deloitte member firms’ most senior energy practitioners.

“According to the announcements made by the Indian government this year, our Government is to take into account the changing pattern of growth in the demand for oil. In the last two decades or so, Asia’s share in the growth in demand for hydrocarbons has risen substantially while that of the OECD countries and the European Union has declined. This shift has been caused by high rates of economic growth and increasing populations in many Asian countries.” said Kalpana Jain, Senior Director, Deloitte Touche Tohmatsu India Private Limited. “The Oil & Gas Reality Check is useful in predicting the course of the industry over the next year to help executives put in place strategies that will not only help their organizations ride out the economic recovery, but also emerge stronger.”

Key findings:

· Oil and gas will continue to constitute the majority of the world’s energy supply over the next 25 years. Despite significant progress in developing renewable and other alternative energy sources, as well as the staggering US$35 billion liability that the Deepwater Horizon spill caused, deepwater drilling continues. However, oil and gas producers around the globe are now reexamining their safety policies.

· Recent discoveries of unconventional gas in North America will demand new markets. According to the report, shale gas in particular is swiftly becoming a game-changer for the U.S. and Canada.

· Oil and gas companies continue to invest in the North Sea. A record 356 exploration licenses for the North Sea were granted in the most recent round of approvals, with no sign of a slowdown in interest in that area.

· Asia has become a hotbed of oil & gas activity. Asian national oil companies have adopted increasingly aggressive tactics in pursuing upstream acquisitions. In particular, China’s domestic unconventional gas production is set to skyrocket. China’s GDP growth, when combined with the Republic’s determination to diversify its fuel supplies and to create a low-emissions environment, bodes particularly well for the future of liquefied natural gas markets. Russia is also increasingly focused on exporting more oil and gas to Asia.