Weekly Covid-19 impact briefing
In this regular report, we combine the expertise of our sister company AIR in global pandemic modelling with our macroeconomic analysis to explore the impact of the coronavirus pandemic across the sectors we cover. Each week, we focus on critical natural resources segments on a rotating basis.
Week 8: 29 May 2020
In this week's coronavirus impact briefing, we look at the fiscal stimuli announced in China and the EU. Both include elements of 'green growth', positive for the energy transition.
We also focus on how coronavirus is impacting Africa, which has seen low levels of cases and fatalities to date. Early lockdowns and favourable demographics are factors in keeping numbers low, but data underreporting is likely. Furthermore, many nations have limited resources to tackle the disease and support economies.
Turning to the global gas and LNG market, it has been hemmed in not just by the impact of coronavirus but also the oil price crash. Total demand losses will mean a net fall in 2020 from 2019 levels, and 5% below our prior forecast. Some oil price impacts are supportive – helping gas compete with coal in power markets across Japan, Korea and Taiwan. Meanwhile, shut-in oil production in the US and Argentina means associated gas production cuts, supporting prices. The impacts though will flow into LNG project activity, with cash flow preservation uppermost in developers’ minds. We see on average a one-year delay on prior FIDs, and a three-year delay in project ramp-up capacity versus operator guidance.
Here's a snapshot of previous week's briefings:
Week 7: 22 May 2020
Gradual easing of lockdowns is stimulating a recovery in oil demand from the April depths.
Week 6: 15 May 2020
The initial signs of recovery in China energy demand are positive, but uneven. The depth of the global recession could yet derail China's recovery.
Week 5: 8 May 2020
All value chains in petrochemicals will suffer reduced demand under ‘setback’ scenario. What does it all mean for the circular economy?
Week 4: 1 May 2020
Oil prices plunge and inventory nears tank tops.
Despite decreased power demand and supply chain disruptions, 2020 will still be the largest year on record for global installations of wind, solar and storage.
Week 3: 24 April 2020
The mining sector was hit early by coronavirus. The fundamental question now is how quickly the miners can bring their assets back online.
Week 2: 17 April 2020
Headline cuts from OPEC+ last weekend will remove a significant volume of supply from the market beginning May. Are they enough to balance the market?
Week 1: 10 April 2020
The oil market faces a crunch Q2 as demand collapses and supply rockets up.