Page 5 - AsianOil Week 01 2021

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The oil import
unsold oil cargoes, and its attempts to attract would drive global oil demand growth until
buyers with price discounts did not always suc- 2040. (India is set to overtake China as the latter surge stressed
ceed. Angola also experienced similar problems, reaches peak demand around 2030, though.) China’s storage
though on a smaller scale. The IEA’s prediction is likely to hold, despite
At the same time, market conditions also the dramatic impact the pandemic has had and handling
affected a number of major investment initia- on the world’s energy landscape. As such, the
tives. Low prices, sluggish demand and lock- success of China and India’s post-COVID-19 capacity
downs delayed final investment decisions (FIDs) economic recovery efforts will go a long way
on several projects, including Eni’s Agogo field, in helping to support oil prices this year. Both
located offshore Angola. They also led some countries are likely to see firm growth in oil
companies to hand their African assets over to demand in 2021, though their responses to last
their partners; for example, FAR Ltd (Australia) year’s oil prices collapse were very different.
and Cairn Energy (UK) both opted to quit the China fared better than most other econo-
Sangomar field offshore Senegal, and their stakes mies in 2020, managing to suppress the spread of
were eventually bought out by Woodside Petro- the virus quickly. And despite Chinese economic
leum (Australia), the project’s operator. activity remaining relatively subdued for much
The same factors also forced the cancellation of the year, importers ramped up their crude
or rescheduling of licensing rounds in multiple purchases to record highs. In a bid to capitalise
countries, including but not limited to Nigeria, on bargain-basement prices, China imported an
Liberia and Angola. Likewise, they led Somalia average of 11.09mn barrels per day in the first 11
and other countries to conduct their bidding months of last year, up from 10.11mn bpd in the
rounds online rather than in person. same period of 2019.
The delays and disruptions also coincided The surge stressed the country’s oil storage
with an upsurge in Western concern over cli- and import handling capacity, with queues of
mate change – and mounting calls for banks of tankers reportedly moored off Chinese ports
all kinds to restrict lending for projects involving for weeks on end. The country’s buying frenzy
fossil fuels. These developments have made some eased somewhat towards the end of the year, as
African officials more eager than ever to get the the backlog of imports was cleared and private
oil and gas sector back on track, so as to max- refiners ran out of import quotas.
imise hydrocarbon revenues in advance of the However, a raft of new storage capacity in
anticipated transition to less carbon-intensive the works and Beijing’s decision to award higher
technologies. Officials in Nigeria, for instance, import quotas for 2021 suggest that China could
have said they want members of Parliament to launch another wave of oil buying this year, espe-
pass the Petroleum Industry Bill (PIB) that was cially in the run-up to the Lunar New Year.
submitted for consideration in August as quickly India, meanwhile, struggled to contain the
as possible so that the country does not lose out spread of the virus last year, and its difficulties
on any more oil and gas earnings. led to the introduction of widespread and severe
social quarantine measures. The country has
Asia: Engines of growth reported more cases of COVID-19 infections
While all eyes were on OPEC+ earlier this week, than any other country outside the US, and
awaiting its decision on whether or not to relax widespread national and local lockdown meas-
production curbs, the oil market’s longer-term ures caused refinery run rates to collapse in the
recovery prospects reside with the economic for- middle of the year.
tunes of the world’s demand centres. While demand recovered towards the end
China and India have long been hailed as of the year, the wider industry anticipates that
the future growth engines of global oil demand. national demand levels will contract in 2020
Prior to the coronavirus (COVID-19) pan- for the first time in two decades. This should
demic, the Paris-based International Energy position the country to see a strong recovery in
Agency (IEA) projected that the two countries oil consumption this year, but much is likely to

Week 01 07•January•2021 www. NEWSBASE .com P5