Page 12 - NorthAmOil Week 01 2021

NorthAmOil COMMENTARY NorthAmOil

countries, including but not limited to Nigeria, storage and handling capacity, with queues of
Liberia and Angola. Likewise, they led Somalia tankers reportedly moored off Chinese ports
and other countries to conduct their bidding for weeks on end. The country’s buying frenzy
rounds online rather than in person. eased somewhat towards the end of the year, as
The delays and disruptions also coincided the backlog of imports was cleared and private
with an upsurge in Western concern over cli- refiners ran out of import quotas.
mate change – and mounting calls for banks of However, a raft of new storage capacity in
all kinds to restrict lending for projects involv- the works, Beijing’s decision to award higher
ing fossil fuels. These developments have made import quotas for 2021 and news that OPEC+ is
some African officials more eager than ever to arguing over a possible relaxation of oil produc-
get the oil and gas sector back on track, so as tion curbs all suggest that China could launch
to maximise hydrocarbon revenues in advance another wave of oil buying this year, especially
of the anticipated transition to less carbon-in- in the run-up to the Lunar New Year.
tensive technologies. Officials in Nigeria, for India, meanwhile, struggled to contain the
instance, have said they want members of Parlia- spread of the virus last year, and its difficulties
ment to pass the Petroleum Industry Bill (PIB) led to the introduction of widespread and severe
that was submitted for consideration in August social quarantine measures. The country has
as quickly as possible so that the country does reported more cases of COVID-19 infections
not lose out on any more oil and gas earnings. than any other country outside the US, and
widespread national and local lockdown meas-
Asia: Engines of growth ures caused refinery run rates to collapse in the
While all eyes are on OPEC+ this week, awaiting middle of the year.
its decision on whether or not to relax produc- While demand recovered towards the end
tion curbs, the oil market’s longer-term recovery of the year, the wider industry anticipates that
prospects reside with the economic fortunes of national demand levels will contract in 2020
the world’s demand centres. for the first time in two decades. This should
China and India have long been hailed as the position the country to see a strong recovery in
future growth engines of global oil demand. oil consumption this year, but much is likely to
Prior to the COVID-19 pandemic, the Par- depend on the government’s ability to distribute
is-based International Energy Agency (IEA) recently approved vaccines effectively.
projected that the two countries would drive New Delhi has already come under fire for
global oil demand growth until 2040. (India is its poor handling of the national lockdown, as
set to overtake China as the latter reaches peak well as its use of specially run trains to shuttle The number of
demand around 2030, though.) stranded migrant workers back to their villages.
The IEA’s prediction is likely to hold, despite The latter strategy effectively rendered the first wells sunk in UK
the dramatic impact the pandemic has had null and void. waters more than
on the world’s energy landscape. As such, the
success of China and India’s post-COVID-19 Europe: North Sea remains profitable halved this year,
economic recovery efforts will go a long way The mature North Sea region has a reputation
in helping to support oil prices this year. Both for comparatively high production costs. But with exploration
countries are likely to see firm growth in oil operators worked hard after the 2014 oil price
demand in 2021, though their responses to last crash to cut expenses, which made the sector drilling seeing the
year’s oil prices collapse were very different. more resilient in the face of the 2020 market biggest decline.
China fared better than most other economies collapse. As such, most North Sea production
in 2020, managing to suppress the spread of the remained profitable even at the height of the
virus quickly. And despite Chinese economic market crisis in April. This said, the downturn
activity remaining relatively subdued for much has led to a significant drop in investment, par-
of the year, importers ramped up their crude ticularly in the UK.
purchases to record highs. In a bid to capitalise Prior to the coronavirus pandemic, UK oper-
on bargain-basement prices, China imported an ators were expected to take final investment
average of 11.09mn barrels per day in the first 11 decisions (FIDs) on 14 upstream projects this
months of last year, up from 10.11mn bpd in the year. All but one – namely, Apache’s approval
same period of 2019. of the Gair oilfield before the market crisis took
The surge stressed the country’s import hold – were delayed.

P12 www. NEWSBASE .com Week 01 07•January•2021