Oil & Gas
Are we seeing the end of crude oil?
Months after some countries in Europe unveiled plans to ban fuel-run cars, France is seeking to stop granting new exploration permits from 2018 as it aims to end all oil and gas production by 2040, according to a draft bill presented at a cabinet meeting recently.
The move would allow the government to turn down more than 40 exploration requests already made, while some existing permits may be extended to respect contracts. That includes the Guyane Maritime license off French Guiana, in which Total SA has a stake, according to an adviser to Ecology Minister Nicolas Hulot.
This legislation would “allow investors to go much further in their renewable investments. Currently oil and gas leave us dependent on geopolitics,” Hulot said.
Under the plan, France will end the sale of gasoline- and diesel-powered vehicles by 2040. It will also progressively increase taxes on fossil fuels, close coal-fired power plants by 2022 and invest more in renewable energies.
While France’s oil and gas output is small, the plan may affect companies which have several concessions, and could reduce the prospect of further discoveries off French Guiana.
France pumped 6 million barrels of oil in 2015, covering just 1 percent of its demand. Oil and gas exploration and production on French soil generates as much as $358 million in annual revenue, and accounts for as many as 5,000 jobs, directly and indirectly. Existing production licenses would not be extended beyond 2040 under the proposed law.
Also, China, the world’s biggest car market, plans to ban the production and sale of diesel and petrol vehicles spelling more trouble for the crude oil market. China is the world’s second-largest crude oil consumer after the US.
Like other countries that are seeking to ban fuel cars, China wants electric cars and plug-in hybrids to account for at least one-fifth of its vehicle sales by 2025.
Xin Guobin, China’s vice industry minister, said it had started “relevant research” but that it had not yet decided when the ban would come into force.
China made 28 million cars last year, almost a third of the world’s total production. Chinese-owned carmaker Volvo said in July that all its new car models would have an electric motor from 2019.
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