October 5, 2017 / 7:59 PM / a year ago

UPDATE 1-Vitol boss sees oil industry shrinking

* Electric vehicles spur shift away from fossil fuels

* Rising U.S. crude exports to depress oil prices in 2018

* Vitol sees oil prices rising towards $60-$65 in 2-3 years (Adds details, quotes)

By Julia Payne

LONDON, Oct 5 (Reuters) - The world's largest oil trader Vitol expects the oil industry to shrink given the quickening pace of the global shift to electric cars and away from fossil fuels, its chief executive said on Thursday.

Vitol CEO Ian Taylor told an event at Chatham House in London he saw oil demand peaking around 2028-2030.

"The industry is in for a period of shrinkage. What keeps me up at night, is thinking -- where is our place in it?" Taylor said, adding that he was concerned about attracting young talent who may instead work for technology start-ups.

"We're looking at a big renewable investment but it doesn't trade," said Taylor, whose firm trades seven percent of global oil.

Of more immediate concern for the industry is the low oil price. The market has shown signs of rebalancing but Taylor said that rising U.S. oil exports will put oil prices under renewed pressure in 2018 although he said prices could recover towards $60-$65 a barrel in the next two to three years.

The independence referendum in the semi-autonomous region of Kurdistan has helped prop up global oil prices over the last two weeks as around 600,000 barrels per day of its crude travels to a Turkish port for exports. Turkey threatens to stop flows through the key pipeline.

Taylor, whose firm is one of the largest lifters of Kurdish crude, said he hopes the region will not split.

"I hope they don't go independent. All they ever said they wanted was to sit down with Baghdad," Taylor said.

Most of the world's oil is priced off the Brent benchmark which in turn is set by four North Sea crude grades.

With shrinking North Sea output, a fifth grade is being added to boost liquidity from next year but Taylor said more crudes should urgently be added to boost liquidity.

He said he did not believe Russia's Urals should be added owing to its multiple loading points and inconsistent loading programmes.

Another upheaval for the oil industry is the decision by the U.N.'s shipping agency to cut sulphur emissions by 2020. The shift spells the end of a major outlet for high sulphur fuel oil (HSFO) production.

Taylor said it was not clear how the market would adjust. He said Vitol would probably install sulphur scrubbers on its own ships.

"Africa won't be an outlet (for HSFO). Sophisticated blending is probably what will happen and high sulphur crude values will drop dramatically," he said. (Reporting by Julia Payne; Writing by Dmitry Zhdannikov; Editing by Ralph Boulton)

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