OPEC bullish on post-pandemic recovery; warns investment shortfall could hit economic comeback

OPEC bullish on post-pandemic recovery; warns investment shortfall could hit economic comeback
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Updated 29 September 2021

OPEC bullish on post-pandemic recovery; warns investment shortfall could hit economic comeback

OPEC bullish on post-pandemic recovery; warns investment shortfall could hit economic comeback

LONDON: The Organization of the Petroleum-Exporting Countries has warned a lack of investment in new oil and gas supplies could lead to tighter supplies and price rises which could derail the fledgling post-pandemic global recovery.

The warning, published in the World Oil Outlook 2021 report released this afternoon, comes amid a sharp rebound in global demand for energy that has already led to a supply crunch and a surge in prices.

The report said the shift toward cleaner fuels and the impact of the COVID-19 pandemic has seen oil and gas investment fall around 30 percent last year.

"Cumulative investment requirements in the oil sector amount to $11.8 trillion in 2021–2045. Of this, 80% or $9.2 trillion, is directed towards the upstream, the bulk of which is in North America, as US tight oil, in particular, drives medium-term non-OPEC supply growth," OPEC said.

OPEC warned that without necessary investment the potential for further volatility and a future energy shortfall would hang over the global recovery.

Gas prices in Europe and Asia are at or near record highs, while those in the United States are at seven-year peaks. Coal prices are at record levels and Brent breached $80 per barrel, its highest level in three years.

While the report was relatively bullish about the wider post pandemic economic recovery, it warned the risk for oil demand over the medium-term is “skewed to the downside”, and added “worries persist about the pace and trajectory of this recovery”.

The report cited concerns about the spread of COVID-19 variants, inflationary pressures, and the ability of central banks to unwind the massive quantitative easing programmes that continue to underpin the current rebound.

OPEC forecast world oil demand will rise to reach a level similar to before the pandemic at 104.4 mb/d by 2026.

However, it added that almost 80% of this incremental demand will materialize within the first three years (2021–2023), primarily as part of the recovery process from the COVID-19 crisis.

OECD oil demand is expected to rise by almost 4 mb/d in the period to 2026, but OPEC added that this increase will not be sufficient to return to pre-COVID-19 demand levels.

Non-OECD demand, driven by increasing populations and growing economies in Asia, Africa and the Middle East, is expected to rise by almost 10 mb/d over the medium-term.  

 

China and Japan and the wider Asia-Pacific region, which is largely supplied by the Middle East, will see an increase in imports from around 23.5 mb/d in 2019 prior to the pandemic, to almost 30 mb/d by 2045.

Middle East exports to the region are forecast to increase  to above 19.5 mb/d by 2045, around 4.8 mb/d higher than levels in 2019.

Overall, OPEC forecast world energy demand will increase by 28% between 2020 and 2045, driven by an expected doubling in size of the global economy and population expansion.  

The report said all energies would see growth except for coal.

Renewables is forecast to enjoy the largest growth, followed by gas, but oil is expected to retain its number one position in the energy mix.

On the eve of COP26, which takes place in Glasgow in the United Kingdom four weeks, OPEC warned that tackling climate change should not increase energy poverty in developing countries.

The report said that amid the wider greening of the global economy, the UN’s Sustainable Development Goals have committed to ensuring access to affordable, reliable, sustainable and modern energy for everyone - a clear reference to the continuing role of oil and gas in the transition to cleaner energy.

The International Energy Agency (IEA) has called on investors to stop funding new fossil fuel projects to reach net zero emissions by mid-century. However, even the IEA’s sustainable development scenario states that oil and gas will account for 46% of the global energy mix in 2040.


Italy’s Enel to launch renewable power project in Australia

Italy’s Enel to launch renewable power project in Australia
Updated 14 sec ago

Italy’s Enel to launch renewable power project in Australia

Italy’s Enel to launch renewable power project in Australia

RIYADH: Enel SpA is the latest European energy giant to announce plans to expand its renewable electricity sales in Australia. 

The Rome-based company will launch a “greentailer” offering 100 percent renewable power to help customers meet sustainability objectives, Bloomberg reported citing a statement by Enel.

The offering initially targets commercial and industrial users but plans to expand to residential users.

This will happen after Enel is issued a retail license this week by the Australian Energy Regulator, the statement said.

The move comes less than a month after the Royal Dutch Shell bought one of Australia’s largest household providers of renewable power.

Enel plans to switch from coal by 2027 and gas by 2040, toward clean energy. It already has 55 GW of renewable energy in its 90-GW global portfolio, Bloomberg said.


Egyptian business sector debt dropped by 77% in 3 years

Egyptian business sector debt dropped by 77% in 3 years
Image: Shutterstock
Updated 06 December 2021

Egyptian business sector debt dropped by 77% in 3 years

Egyptian business sector debt dropped by 77% in 3 years

RIYADH: Companies in the Egyptian business sector have managed to decrease their debts by a notable 77 percent in three years.

Hisham Tawfik, minister of Public Business Sector said the debts dropped from 44 billion Egyptian pounds ($2.8 billion) to 10 billion Egyptian pounds, with the remainder mostly consisting of taxes.

Tawfik said that a settlement had been reached on the debt with only taxes outstanding.

He added that the original value of the debt in 2018 also included costs such as electricity and petroleum. 


Oil gains after Saudi price hike indicating confidence in the demand outlook

Oil gains after Saudi price hike indicating confidence in the demand outlook
Image: Shutterstock
Updated 06 December 2021

Oil gains after Saudi price hike indicating confidence in the demand outlook

Oil gains after Saudi price hike indicating confidence in the demand outlook
  • The price hikes were implemented just days after OPEC+ had agreed to boost output in January

RIYADH: Oil prices rose after top exporter Saudi Arabia raised prices for its crude sold to Asia and the US, shrugging off worries around the omicron variant and suggesting confidence in the demand outlook. 

Bloomberg reported that oil giant, Saudi Aramco, raised its key Arab Light grade for customers in Asia by 60 cents from December to $3.30 a barrel above a benchmark, according to a statement.

The price hikes were implemented just days after OPEC+ had agreed to boost output in January.

"The Saudi move to increase pricing is driving the market,” said Warren Patterson, Singapore-based head of commodities strategy at ING Groep NV.

“A bit of an odd move, given the supply hike in January, the omicron uncertainty and the expectation of a better supplied market in the first quarter of 2022.”


US’s Lockheed Martin to design NASA space station

US’s Lockheed Martin to design NASA space station
Image: Shutterstock
Updated 06 December 2021

US’s Lockheed Martin to design NASA space station

US’s Lockheed Martin to design NASA space station
  • The company will be working on the Starlab project along with Nanoracks and Voyager Space

RIYADH: Lockheed Martin, the US-based aerospace company has confirmed it is one of three partners awarded a $160 million contract by NASA. 

As per the contract, the company is to design NASA’s Starlab commercial space station as part of the US agency’s Commercial Low-Earth Orbit Development program, Cobb County Courier reported. 

The company will be working on the Starlab project along with Nanoracks and Voyager Space. 

“Starlab is the confluence of Lockheed Martin’s rich space expertise and history, Nanoracks’ innovation, and Voyager’s financial savvy,” said Lisa Callahan, vice president and general manager at Lockheed Martin.

“This team is equipped to aid NASA on its mission to expand access to LEO and to enable a transformative commercial space economy,” she added. 

Last month, the company appointed Robert Lightfoot as the new executive vice president of the Space business area as of Jan.1 2022. 


China’s economy expected to grow 5.3 percent in 2022, says govt think tank

China’s economy expected to grow 5.3 percent in 2022, says govt think tank
The main shopping street in Shanghai. Shutterstock.
Updated 06 December 2021

China’s economy expected to grow 5.3 percent in 2022, says govt think tank

China’s economy expected to grow 5.3 percent in 2022, says govt think tank
  • The world’s second-largest economy is expected to have expanded by about 8 percent this year

China’s economy expected to grow 5.3 percent in 2022, says govt think tank

China’s economy is expected to grow around 5.3 percent in 2022, bringing the average annual growth rate forecast for 2020-2022 to 5.2 percent, the Chinese Academy of Social Sciences (CASS), a top government think tank, said on Monday.


Advisers to the government will recommend that authorities set a 2022 economic growth target lower than the target set for 2021 of “above 6 percent,” Reuters reported, amid growing headwinds from a property downturn, weakening exports and strict COVID-19 curbs that have impeded consumption.


The world’s second-largest economy is expected to have expanded by about 8 percent this year, according to the annual blue book on the economy from CASS.

The think tank warned that the property downturn was likely to persist and weigh on the expenditures of local governments next year.


It urged the central government to proactively engineer a soft landing for the property sector, to avoid failed land auctions in big cities and to fend off risks of quickly falling property prices in smaller cities, the report said.