Page 18 - Gi_March2021
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from black gold to green shoots


                 ahead has fallen to 62 per cent – down   FIGURE 1 PROPORTION EXPECTING TO INCREASE INVESTMENT IN OIL, GAS AND RENEWABLES FOR THE YEAR AHEAD
                 from 72 per cent going into 2020 – this   (AT THE TIME OF ASKING)
                 is much higher than the 43 per cent
                 recorded following the last downturn.
                   The oil and gas industry is moving
                 through its third major downturn in
                 12 years, but the outlook for 2021 is
                 influenced by the possibility that this
                 slump may be different from those of
                 the past.
                    During the last decline, the industry
                 cut costs and waited for oil demand to
                 rise, then renewed investment in oil
                 and gas – following a cyclical response
                 to expected cyclical market trends.   FIGURE 2 INDUSTRY CONFIDENCE AND PESSIMISM CROSS FOR THE FIRST TIME IN FOUR YEARS
                    Cost cutting is expected to be more
                 challenging than ever in 2021 having
                 been an uninterrupted priority in each
                 of the past seven years.
                   The pandemic has forced
                 organisations to throw the normal rules
                 to the side, making them more open
                 to change. This time, signs are that the
                 industry has mobilised to forge its own
                 future as it recovers from deep market
                 turmoil. The sector may invest to
                 transform rather than cut its way out of
                 the present crisis.
                 THE GAS OUTLOOK REMAINS STEADY
                 While some in the industry are   FIGURE 3 PROPORTION OF RESPONDENTS WHO SAY THEIR ORGANISATION IS ACTIVELY ADAPTING TO A LESS
                 expecting a quick recovery, most   CARBON-INTENSIVE ENERGY MIX, BY REGION
                 companies are betting long-term when
                 making transformational investments as
                 multiple, parallel transitions take place
                 at different speeds around the world.
                   DNV’s Energy Transition Outlook
                 2020, an independent forecast of the
                 world’s energy system through to 2050,
                 forecasts that fossil fuels will still be
                 needed to supply half of the world’s
                 energy at mid-century, with natural
                 gas the world’s largest energy source.
                 The sector still needs to do more than
                 improve energy efficiency and drive
                 renewables to hit the targets of the
                 Paris agreement.
                   DNV’s modelling estimates that
                 natural gas will grow its share of
                 primary energy supply from 26 per   terminals to receive the gas.   economy simply return to the status
                 cent in 2018 to 29 per cent in 2050.   Among oil and gas professionals   quo of late 2019.
                 Over the same period, the research   surveyed, 46 per cent say that their
                 predicts the share of oil will fall from   organisation has committed to reducing    Launched in 2011,
                 29 per cent to 16 per cent¹.     emissions by at least half, by 2050. As   each edition of Turmoil
                   The investment outlook for gas goes   policy and public sentiment become   and Transformation
                 beyond upticks in demand; there is   greener over the next few years, we   builds on the findings
                 also transformation at work. LNG will   expect this proportion to rise quickly.  of previous research
                 be increasingly traded. This will drive   In 2021, as the world cautiously   to provide a consistent
                 a surge in capex, which DNV predicts   emerges from the pandemic, the timing,   set of industry insights.
                 will peak at around $250 billion for   urgency and certainty of the energy   Download a copy
                 both 2024 and 2025. New sources of gas   transition should become clearer, and   at www.dnvgl.com/
                 supply, particularly in North America,   the industry will be able to mobilise   industryoutlook2021
                 will establish the infrastructure needed   itself through the turmoil towards
                 to sell gas to new centres of demand   transformation. Whatever the nature   References
                 in China, India, and South East Asia,   of the recovery, it seems clear that
                 where investments are being made in   too much has changed for the global   1. www.eto.dnvgl.com/2020/index.html



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        DNVGLReport.indd   3                                                                                      11/02/2021   08:35
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