Jonathan Weiss/Shutterstock Save for later Print Download Share LinkedIn Twitter The deep rift between Russia and the West will have lasting impacts on the global energy system and result in lower long-term demand for oil and gas, according to a closely watched annual assessment from BP.In its Energy Outlook 2023, BP lowered its estimate of oil's role in the 2035 energy mix by 5% and the role of gas by 6% compared to its 2022 outlook, under its New Momentum scenario, which reflects current government policies and technology.In its Accelerated and Net Zero scenarios, which roughly correspond to increases of 2°C and 1.5°C in global temperatures, oil and gas use falls more rapidly."History has taught us that threats to energy security can have large and persistent impacts on the structure of global energy," said BP Chief Economist Spencer Dale.He pointed to the oil shortages of the 1970s as an example, which led to the creation of strategic petroleum reserves, the massive build-out of nuclear energy in France and the push for more fuel-efficient automobiles.The change is attributable to a couple of factors, Dale explained. First, major energy importers, particularly in Europe are looking to renewables for energy security as they try to limit their dependence on imports."The increased importance placed on energy security as a result of the Russia-Ukraine war leads over time to a shift away from imported fossil fuels towards locally produced non-fossil fuels, accelerating the energy transition," BP said.While this is most noticeable in Europe, BP also sees a similar trend in China and India over the next three decades.In all three instances, limited domestic hydrocarbon resources mean that efforts to reduce imports push those countries toward renewables rather than toward trying to produce more oil and gas at home.Energy to Fuel InflationOverall, BP's estimates for the share of renewable power in the total energy mix increased 5% relative to its 2022 estimate while nuclear grew by 2%.Second, inflation in energy prices, and knock-on effects in the cost of things like food, will slow economic growth in the coming decade, further dampening demand for fossil fuels.By BP's reckoning, economic growth will be about 3% lower from 2025 to 2035 and 6% lower to 2050, compared to last year's projections."The direct economic impact of this commodity price shock is set to persist for the next few years," BP said, noting that headwinds building against globalization will reduce economic growth over the next 30 years.Under each of BP's three scenarios, oil demand will peak by around 2030 and plateau before going into an accelerating decline thereafter. But under the New Momentum scenario, global demand falls just 30% by 2050 as the world falls well short of its net-zero emissions goals.Under its more ambitious Accelerated and Net Zero scenarios, oil demand falls by 60% and 80%, respectively, driven by a decline in the use of oil for road transport. Rosier Outlook for GasBy contrast, BP sees potential for significant and persistent growth in gas demand under a continuation of current policies. Under its New Momentum scenario gas demand grows out to 2040 and by 2050 it will still be 20% greater than it is today.But under the more ambitious Accelerated and Net Zero scenarios demand peaks by 2030 at the latest and falls rapidly thereafter."Prospects for natural gas depend on the outcome of two significant but opposing trends: increasing demand in emerging economies as they grow and industrialize, offset by a shift away from natural gas to lower-carbon energy led by the developed world," the report states. "The net impact of these opposing trends on global gas demand depends on the pace of the energy transition," it added.Analysts at investment bank Redburn — which has previously downgraded the oil and gas sector on concerns it will face a rising cost of capital — said BP's latest report raises well-known dilemmas for investors about the long-term outlook for oil and gas companies, but does not diminish a near-term bullish case for producers."The outlook is a reminder that terminal value questions around the sector have not gone away," they said in a note to clients. "However, we believe that oil demand is likely to grow this decade (at least) and that certainly right now investors are much more focused on China's reopening than any longer-term structural demand trends!"