France pumped 6 million barrels of oil in 2015. File Image / Pixabay
While the latest on the Organization of the Petroleum Exporting Countries (OPEC) front sees Russia and Saudi Arabia discussing extending the cartel's oil output reduction initiative without reaching any specific conclusion, France is taking a more pro-active approach to the problem of overproduction: during a Wednesday cabinet meeting, the country moved to end all oil and gas production by 2040 by halting exploration permits next year.
According to a draft bill presented at cabinet, the French government could refuse over 40 exploration requests already made, and some existing permits may be extended to respect contracts such as the Guyane Maritime license off French Guiana, in which Total SA has a stake.
Nicolas Hulot, the country's ecology minister, said the legislation would "allow us to progressively free ourselves" and "allow investors to go much further in their renewable investments: currently, oil and gas leave us dependent on geopolitics."
Nicolas Hulot, ecology minister, France
Currently, oil and gas leave us dependent on geopolitics
France pumped 6 million barrels of oil in 2015, and its oil and gas exploration and production on French soil generates as much as $358 million in annual revenue; however, plans are underway to end the sale of gasoline and diesel powered vehicles by 2040 and progressively increase taxes on fossil fuels by 2022; this will presumably render the country carbon neutral by 2050.
But while these initiatives may please green groups, France may be shooting itself in the foot from a global perspective, if a forecast by DNV GL proves true: the DNV GL's Energy Transition Outlook believes that while renewable energy will grow its share of the energy mix, oil and gas will still account for 44 percent of world energy supply in 2050, compared to 53 percent today; it also thinks gas will become the largest single source of energy from 2034.
The Outlook portrays gas as playing a key role alongside renewables in helping to meet future, lower-carbon, energy requirements, with major oil companies intending to increase the share of gas in their reserves.
Elisabeth Tørstad, CEO for DNV GL – Oil & Gas, said, "The oil and gas industry must continue on a path of strict cost control to stay relevant; coming from a tradition of technological achievements, and having the advantage of existing infrastructure and value chains, this industry has the potential to continue to contribute to energy security and shape our energy future."
Meanwhile, OPEC and its allies continue to tantalize media with vague comments about the prospect of extending their production cutbacks, which have yet to achieve any meaningful market rebalance.
Alexander Novak, Russia's energy minister, said, "We met in St Petersburg and discussed such an option (with Saudi Arabia) - that it is possible within the framework of the signed agreements.
"We are considering all kinds of options; we may consider the issue of extending if need be."
Earlier this week, as Russia's deputy prime minister indicated a extension of the cutbacks is likely, it was reported that the former Soviet Union increased its oil and gas production between January and August of 2017 by 0.9 percent year over year, amounting to 364.8 million tonnes.