Jet fuel and petrochemicals are expected to fuel crude demand this decade. Moreover, oil demand in the transport sector is set to peak by 2026. This is one year earlier than originally anticipated. Goldman Sachs believes oil demand will peak in 2026. Then, BP Plc believes the highest global demand growth is already over. Now, the International Energy Agency (IEA) thinks the peak could come later, in 2030. However it’s framed, it is clear that the oil and gas industry is facing a turbulent future.

The adoption of electric vehicles (EV) is expected to increase sharply over the next decade, driving down the demand for oil to power road transportation. According to Deloitte, we can expect a CAGR of 29 percent for the EV industry between now and 2030, with sales expected to increase from 2.5 million in 2020 to 11.2 million by 2025, and 31.1 million by 2030.

It is thought that China will account for around 49 percent of the global EV market share, with Europe following at 27 percent and the USA with a 14 percent market share. Developed countries are expected to drive EV demand over the next decade until growth levels out in the 2030s.

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Source: Oil Price

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Has peak oil demand already come and gone? That’s an exceptionally hard question to answer. There are some experts that say unequivocally, yes. They claim that peak oil is already upon us, thanks to the crushing blow that the Covid-19 pandemic dealt to global oil demand as well as the ever-escalating worldwide transition toward clean energy. But there are just as many who say that the world’s thirst for oil still has a long way to go before we hear its swan song.

Regardless of whether oil demand has peaked or plateaued during the pandemic, what is undeniably true is that the world is going to burn a whole lot more oil in the future before the global community is able to decarbonize entirely – a goal that is still a long, long way off, no matter who you ask.

“The world is expected to burn hundreds of billions of barrels of oil in the coming decades,” Bloomberg Markets reported this week. “That gives plenty of incentive for giants like Total or Royal Dutch Shell Plc, plus the hundreds of smaller explorers that remain in business, to keep searching the world’s frontiers for the next place to sink their drill bits.”

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Source: Oil Price

U.S. oil production remains about 2 million bpd lower than its pre-pandemic levels. Still, methane emissions are already back to their levels from before the coronavirus. Worrying as this is in itself, it could also threaten energy companies’ long-term growth prospects because investors’ priorities are changing. What investors want from oil and gas now is not just stable returns but a lower carbon—and methane—footprint.

The Financial Times reported recently, citing data from the Environmental Defense Fund, that methane emissions in the U.S. shale patch had rebounded to pre-pandemic levels already, after dropping sharply as oil and gas production dropped last year amid the pandemic. Methane is a much more powerful greenhouse gas than carbon dioxide, although it dissipates faster in the atmosphere and has recently been garnering growing attention from regulators, environmentalists, and, now, shareholders.

“The investor community that stuck with [the shale industry] is the steady ones, that want discipline, that want predictability,” Regina Mayor, global head of energy at accounting major KPMG, recently told Forbes in an interview. “That’s the investor base they are all pandering to now. The growth investors are gone.”

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Source: Oil Price

There are signs that the crisis engulfing Venezuela’s shattered petroleum industry could start to ease. In a recent televised address, Venezuela’s President Nicolas Maduro stated that Venezuela was open for oil investment from the U.S. and around the world. That coupled with earlier plans to open the Latin American country’s state-controlled petroleum industry to private control of some petroleum projects has sparked a flurry of interest in the near-failed state.

These events have triggered considerable speculation that representatives of foreign energy companies are traveling to Caracas to explore the opportunities that exist in Venezuela’s broken energy sector. The petroleum-rich Latin American country is endowed with the world’s largest oil reserves, totaling 304 billion barrels, with many existing oilfields currently inactive because of PDVSA’s lack of resources. Those characteristics indicate there are considerable opportunities for foreign energy companies, especially if Maduro, as rumored, is willing to provide them with proprietary control of energy assets.

A Reuter’s January 2021 article highlighted that small domestic oilfield contractors were meeting with Venezuelan officials to discuss operating fields owned by national oil company PDVSA in exchange for receiving a share of the profits.

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Source: Oil Price

Last year is the lowest spending on new field developments in 30 years. The offshore oil and gas sector is set to increase capital expenditures significantly.

Upstream oil & gas spending will to surge to around US$44 billion this year. This is in comparison to just US$12.3 billion. It is worth of engineering, procurement, and construction (EPC) contracts awarded in 2020. In 2019, before the pandemic hit oil demand and prices, the EPC contracts in the industry were around US$40 billion.

“In 2021, we will see a significant uptick in activity”. This is what Thom Payne, Head of Offshore at Westwood Global Energy Group said at Riviera Maritime Media’s Annual Offshore Support Journal virtual conference and exhibition on Wednesday.

Most of this year’s capital expenditure and the biggest EPC contracts will go to major natural gas projects offshore Australia and deepwater oil project developments offshore South America.

The significant increase in 2021 will also help the offshore rig and support vessel markets this year, Payne said at the conference. It is part of which will come from the deferred spending in 2020.

Payne is mentioning in an analysis that offshore investment is set for a rapid rebound this year. It is through a deferral of projects from 2020 and a “resurgent Petrobras.”

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Source: Oil Price

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