ZUG, Switzerland (Reuters) - OPEC nations that deliver some of the lowest cost production will be relatively insulated from an early peak in oil demand caused by any faster-than-expected roll-out of electric vehicles, Glencore’s chairman said on Monday.
Members of the Organization of the Petroleum Exporting Countries meet this week in Vienna to decide whether to extend output cuts to reduce oversupply.
Glencore is among the mining companies that anticipate electric vehicles could have a much earlier impact than previously thought, which is beneficial to them as suppliers of copper, cobalt and other minerals, but negative for oil firms.
“Historically the view was oil demand would increase beyond 2040,” Glencore Chairman Tony Hayward, who was formerly head of oil major BP, told journalists at Glencore’s headquarters in Zug.
“With the progress companies have made with electric vehicles, it’s quite likely that (peak in oil demand) will come forward,” he said.
“It’s probably not very good news for the oil industry and quite good news for the mining industry.”
Asked whether OPEC still had the power to react to the potential glut in supply, he said expensive deepwater oil and Canadian tar sands, rather than OPEC crude, would be forced out of the market.
“OPEC ultimately has the lowest cost curve in the market and there will be space for it in the market.”
Glencore CEO Ivan Glasenberg said it was good for Glencore that its portfolio contained little oil and he saw the potential for a doubling in demand for copper.
That is one of the commodities whose supply Glencore dominates, with production of around 1.4 million tonnes, rising to 1.8 million tonnes, when capacity is increased in Democratic Republic of Congo and Zambia in 2018 and 2019.
Glasenberg said that if the world manages to achieve a 90-95 percent share of electric vehicles by 2035, that could nearly double world copper consumption from around 23 million tonnes per year now.
The International Energy Agency has said it will review its electric vehicle (EV) use and oil demand forecasts after India and China flagged new policies in favour of electric cars and vehicles using other alternatives to gasoline.
Editing by Alexander Smith