The COVID-19 pandemic resulted in a sharp fall in global oil and gas demand as countries imposed lockdown restrictionsThe COVID-19 pandemic resulted in a sharp fall in global oil and gas demand as countries imposed lockdown restrictions.
Verdict has conducted a poll to assess which type of upstream developments will attract investment in the current pandemic scenario.
Analysis of the poll results shows that integrated LNG and unconventional resources will attract investment, as opined by 46% of the respondents.
While approximately 26% of the respondents opined that integrated LNG will attract investments, 20% opined that unconventional resources will attract investments.
Approximately 14% of the respondents each voted that near-field tie-ins, greenfield oil, and expansion projects will attract investments, while 12% of the respondents opined that greenfield gas developments will attract investments.
The analysis is based on 231 responses received from the readers of Offshore Technology, a Verdict network site, between 18 June and 30 September 2020.The oil and gas (O&G) industry experienced an unprecedented shock
in demand due to the COVID-19 pandemic, which drove down Brent crude
oil prices to below $20 a barrel. Although prices have recovered since
lifting of lockdowns, the industry has been forced to reduce production
as the current prices make production uneconomical.
O&G companies have also reduced capital expenditure and halted development plans to cope with the impact of the pandemic. Upstream expenditure is expected to decline by one-third from 2019, according to the International Energy Agency (IEA).
O&G companies will need to reinvent their business models, improve efficiency and extend the economic life of their assets, according to McKinsey & Company which adds that the companies will need to focus on assets with low break-even prices and potential to increase reserves.
The pandemic is also expected to accelerate energy transition, which O&G companies will need to adopt to survive. Finance and capital allocation in addition to risk management will be key factors in generating acceptable returns in such an environment. Demand for gas and LNG is likely to grow in this scenario as they are considered to be cleaner resources compared to oil.
(www.offshore-technology.com, 12 October, 2020)
