Page 5 - AsianOil Week 01 2021
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AsianOil                                     ASIA-PACIFIC                                           AsianOil
























                                                                                                    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



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