Page 6 - AfrOil Week 10 2020

AfrOil COMMENTARY AfrOil
Since the start of 2020, many companies and investors, with BlackRock and BP in the fore- front, have declared that climate risk is invest- ment risk, and that they will put sustainability and emissions reduction at the forefront of their strategies.
Demand
Global oil demand fell by 2.5mn bpd on the year in the first quarter, or around 2.5%, the IEA estimated in its report, as coronavirus fears cut travel and economic activity. China accounted for 1.8mn bpd of that fall.
The IEA has now reduced its oil demand forecast, with this decreasing in 2020 before sharply rebounding in 2021. From then on, growth will be sluggish until 2025.
For this year, demand is now set at 99.9mn bpd, down around 90,000 bpd from 2019. This is a sharp downgrade from the IEA’s forecast in February, which predicted global demand would grow by 825,000 bpd in 2020.
Now that prices have fallen, market observ- ers will now be anxious to see them rebound, although this could take months.
“Looking ahead, prices will eventually rebound, as current levels are below the mar- ginal cost of production for the majority of operators, including all the US shale basins. Sub-$40 isn’t sustainable for any longer than a short period, most likely just months,” said Jack Allardyce, oil and gas research analyst at Can- tor Fitzgerald Europe. “An extended period of low prices would generally be expected to have a positive impact on demand, although the current picture is clouded given the growing
coronavirus outbreak.”
Commitments
While the oil price shock and the Saudi-Rus- sian production conflict are supply prob- lems, demand may refuse to rise on low prices because of lower economic activity caused by the coronavirus.
Looking ahead, the IEA said the short term would ultimately depend on how quickly gov- ernments move to contain the coronavirus out- break, how successful their efforts are, and what lingering impact the global health crisis has on economic activity. Birol’s comments bring into focus the fact that energy companies’ commit- ments to reduce emissions and combat climate change are vulnerable to receiving less invest- ment and operational focus. ™
PIPELINES & TRANSPORT
Dangote Group outlines plan
for offshore gas pipeline project
Oil, gas and renewable energy are all vulnerable (Photo: Morningstar Corp.)
NIGERIA
NIGERIA’S Dangote Industries Ltd (DIL) has outlined plans for the construction of a high-ca- pacity subsea pipeline capable of handling more than 31bn cubic metres per year of associated gas from offshore oilfields.
Devakumar Victor Edwin, DIL’s executive director for strategy, capital projects and portfo- lio development, told the Blueprint newspaper that the group was seeking to build a 1,100-km offshore pipeline network serving oilfields in the Niger River Delta region. The system will have a throughput capacity of 3bn cubic feet per day (equivalent to 84.96mn cubic metres per day, or 31.03 bcm per year), he said.
It will be the largest subsea gas transportation network in the world, he added.
Edwin went on to say that DIL had drawn up plans for the subsea pipeline within the
framework of a wider effort to establish an industrial complex in the Lekki Free Trade Zone
(FTZ) in Lagos. 
The pipeline will supply gas to plants in the Lekki FTZ (Image: Lekki Deep Sea Port)
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w w w . N E W S B A S E . c o m Week 10 11•March•2020