The global economy and oil demand are most likely not headed for a V-shaped recovery as the pandemic will have a knock on energy demand for years, Shell’s chief executive Ben van Beurden told IHS Markit Vice Chairman Daniel Yergin in an interview.
“It’s most likely not going to be a V-shaped recovery,” van Beurden said.
While gasoline demand is recovering due to increased use of personal transport, energy demand and some of the demand for mobility will continue to be lower even when the virus is behind us, Shell’s top executive noted.
“But in general, energy demand and certainly mobility demand will be lower even when this crisis more or less [is] behind us. Will it mean that it will never recover? It’s probably too early to say. But it will have a permanent knock for years,” van Beurden said.
Shell’s boss said on the Q1 earnings call at the end of April that the current crisis is a “crisis of uncertainty,” and we don’t know what’s on the other side of it, as the supermajor slashed its dividend for the first time since World War II.
“We are looking at a major demand destruction that we don’t even know that will come back. So the oil price may come back. But if the volumes are significantly lower, we still have a major dislocation, of course, in our own cash wheel,” van Beurden said in April.
BP’s chief executive Bernard Looney is not ruling out either that the oil demand crash and perhaps the subsequent lasting change in people’s lifestyle may have already brought about peak oil demand.
At the height of the lockdowns around the world, Shell announced in April its ambition to become a net-zero emissions energy business by 2050 at the latest, joining other majors such as BP and Eni in unveiling plans to curb carbon emissions.
Commenting on Shell’s net-zero ambitions, van Beurden told IHS Markit’s Yergin:
“Zero is zero. We want to be a company that is zero in terms of the emissions associated with its business. Can’t be clearer than that.