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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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