IEA: Pandemic Could Delay Energy Demand Recovery. Upstream Spending to Grow

Noah Browning
Tuesday, October 13, 2020

A slow economic recovery from the pandemic threatens to delay a full rebound in world energy demand to 2025, the International Energy Agency said on Tuesday.

In its central scenario, a vaccine and therapeutics could mean the global economy rebounds in 2021 and energy demand recovers by 2023, the IEA, which advises Western governments on energy policy, said in its annual World Energy Outlook.

But under a "delayed recovery scenario", the timeline is pushed back two years, it said.

In such a case, the IEA predicts "a deeper near-term slump erodes the growth potential of the economy, high unemployment wears away human capital, and bankruptcies and structural economic changes mean that some physical assets become unproductive as well."

The Paris-based IEA sees global energy demand falling by 5% in 2020, CO2 emissions related to energy by 7% and energy investment by 18%.

Demand for oil is set to fall by 8% and coal use by 7% while renewables will see a slight rise.

Overall, the energy watchdog said it was too soon to say whether the pandemic had acted as a spur or a setback to governments and the energy industry as they seek to make the industry more sustainable.

IEA chief Fatih Birol told Reuters that policy makers were lagging behind: "We are far from reaching our climate goals with the existing policies around the world."

"The era of global oil demand growth will come to an end within the next 10 years, but in the absence in a large shift in government policies, I don't see a clear sign of a peak. A global economic rebound would soon bring oil demand back to pre-crisis levels," he said in an interview.

Uncertainty over future demand and the oil price plunge in 2020 could mean that oil producers are unsure how to gauge investment decisions leading to a mismatch in supply and demand, stoking future market volatility, the IEA warned.

In its central scenario, the IEA predicts "upstream investment picks up from the low point in 2020, underpinned by a rise in the oil price to $75 a barrel by 2030. However, it is not clear whether this investment will come in time and, if it does come, where it will come from."

(Reporting by Noah Browning; editing by Jason Neely)

Categories: Energy Industry News Activity Oil Gas Renewables

Related Stories

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Japanese Oil and Gas Firm Enters Two Blocks off Malaysia

Woodside Agrees Long-Term LNG Supply with Petronas Unit

Chuditch Gas Field Drilling Ops Get Delayed to Next Year

Fugro Expands Geotechnical Testing Capabilities in Indonesia

CNOOC Starts Production at Offshore Field in South China Sea

Aker Solutions, PTAS JV Hooks Brownfield Services Extension off Brunei

BP Expands Oil and Gas Scope in Azerbaijan with New Projects and Exploration Rights

OMV Exits Ghasha Gas Project off UAE with Lukoil Stake Sale

Current News

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Japan Protests China’s New Oil and Gas Construction Activities in East China Sea

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Petronas Expands Suriname Portfolio with Deepwater Block Acquisition

Japanese Oil and Gas Firm Enters Two Blocks off Malaysia

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com