Global oil demand is likely to be 10% lower than today by 2040, but the world would still require substantial amounts of fossil fuels, according to BP chief executive Bob Dudley.

Speaking at the Oil & Money conference in London, on Wednesday, Dudley said "trillions of dollars of investments in oil and gas will still be needed"by oil companies in an aggressive Paris Climate Accord compliance scenario, due to the expected natural declines.

Dudley claimed that under investment in the oil & gas exploration sector poses significant risks for the industry and oil pricing.

"I believe the more serious systemic risk comes from under investment in oil & gas exploration and production, not over investment,” he said.

Dudley warned that lower investments in the oil and gas sector could have “serious and far-reaching consequences”.

While acknowledging the rise of renewables in the energy mix over the next few decades, Dudley claimed that oil and gas would continue to command a significant share.

“Renewables could supply around a third of the energy mix by around 2040. But we still need to meet the remaining two-thirds of demand - and oil and gas have a crucial role to play,” he added.

Dudley said that a race to renewables is not enough for oil and gas companies to meet the Paris goals on its own. Instead, oil companies must be in a race to lower emissions by all means possible.

BP is preparing for a future where the oil price is expected to range between $60 to $65 per barrel, he claimed.

Dudley also said that BP is pitching for a carbon tax proposal in the US, supported by ExxonMobil. This new proposal is expected to limit the climate liability of the industry in US courts, where presently more than a dozen suits have already been filed.

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Industry 'must invest trillions of dollars' - Dudley