Demand for oil will not shrink overnight despite governments preparing for a transition into electric cars, the CEO of Shell told CNBC on Thursday.
“Even in the most aggressive scenario, where policies really work at their best, where technology really makes a lot of strides in the near future, oil isn’t going to peak before the late (2020s) or early 2030s and when it does peak it’s not going to go out of fashion overnight,” Ben van Beurden, chief executive officer at Royal Dutch Shell said.
Oil firms have struggled with subdued prices in recent years. At the same time, France and the U.K. have announced plans to end petrol and diesel cars by 2040. However, Van Beurden is not worried with these changes and actually supports the transition.
“Supply will shrink faster than demand can shrink and therefore working on oil and gas projects will remain relevant for many decades to come,” he added.
Shell reported its second-quarter earnings on Thursday. The largest oil firm in Europe showed a strong rise in cash flows. It also saw net profit, measured in the oil industry on a current cost of supplies basis, rise 245 percent from $1 billion for the second quarter of 2016. The stock was up by 1.2 percent in early trade.