Royal Dutch Shell PLC laid out a pessimistic vision for the future of oil on Thursday, even as the company reported success in generating cash during a prolonged downturn.
Shell has cut costs and said it is preparing for a world in which crude prices never return to precrash levels and petroleum demand eventually declines. Shell Chief Executive Ben van Beurden said the company has a mind-set that oil prices would remain “lower forever”—a riff on the “lower for longer” mantra the industry adopted for a price slump that proved unexpectedly lasting.
“We have to have projects that are resilient in a world where oil has peaked,” Mr. van Beurden told reporters on a conference call discussing the company’s second-quarter financial results. “When it will happen we don’t know, but that it will happen we are certain.”
The views of the British-Dutch oil company reflect the transition under way in a global energy industry grappling with the twin forces of an oil-supply glut and a looming consumer shift away from petroleum. These trends are even more pronounced for oil companies in Europe, where local and national governments are trying to phase out vehicles with combustion engines, encourage electric automobiles and reduce overall carbon emissions.
Experts differ on the timing of peak oil demand. In its most conservative scenario, Shell sees oil peaking within the coming decade. The International Energy Agency says the timing will be more like 2040. The advent of declining demand—after decades of untiring growth—would likely cause a slide in the value of oil and the companies that produce it.