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IEA says oil market outlook clouded by vaccine roll-out variables

January 15/2021

MOSCOW (MRC) -- Oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, reported Reuters with reference to an official with International Energy Agency's (IEA) statement.

"Producers are grappling with huge uncertainty about where this goes from here," Tim Gould, head of energy supply outlooks and investment, told the Gulf Intelligence forum.

"That's not just in terms of economic recovery but indicators we wouldn't necessarily normally be looking at: (such as the) levels of trust in different countries about vaccines."

OPEC and allied countries such as Russia agreed this month to cut crude production through March in a bid to match abundant supply with demand which has sagged amid surging virus cases while vaccination programs get underway.

While the pandemic has prompted some energy majors and watchdogs to predict that a peak in the world's demand for oil has been brought nearer or may have already come and gone in 2019, Gould said the IEA disagreed.

"As things stand, with the pace of change we see on the structural side is not enough in our view to deliver a peak anytime soon."

"Growth in the economy, recovery in the economy will sooner or later bring oil demand back to 2019 levels. The 2020s in our view are the last decade in which you're likely to see increasing oil demand," he added.

As MRC wrote earlier, the COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegazs existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.


mrcplast.com
Author:Margaret Volkova
Tags:Asia, Europe, PP, PE, crude and gaz condensate, homopolymer PP, propylene, HDPE, ethylene, petrochemistry, Gazprom neft, Sibur Holding, Shurtans Gas-Chemical Plant, China, Russia, Uzbekistan.
Category:General News
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