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  • There is more line of sight into certain components of oil demand hitting their peak than just a few years ago. Petrochemicals demand, however, is poised to continue growing into the next decade. That said, we already see signs of a slowdown in petchems demand growth over the medium term, with single-use applications especially at risk. Overall, we expect core plastics demand to grow on average 3% annually in the 2020s versus 4% per year last decade. While demand for single-use plastics could flatline by 2030, we expect 2% gains per year in the 2020s. For now, we see only limited gains in recycling and the availability of alternative products, including bioplastics. Yet, amid growing pressures related to climate, the energy transition, and environmental, social and governance priorities, the push for alternatives is likely to gain steam this decade, adding to demand risks in the 2030s.
    Tue, Feb 25, 2020
  • In our recent discussions around the world, clients have continued to ask whether environmental, social and governance (ESG) priorities are just a fad. Although some aspects of ESG pressures remain nebulous, their importance is rising in parallel with the increased attention to climate-related risk. Recent announcements ranging from BlackRock to BP highlight that the oil and gas industry will face growing societal and investor demands not only to demonstrate climate resilience but also to advance the transition to a low-carbon energy system. Publicly traded companies will continue to feel the greatest heat, but no oil and gas firm will likely be spared.
    Wed, Feb 12, 2020
  • In some areas, especially political and investor pressures, momentum supporting a transition to a low-carbon energy system appears to be accelerating. Yet others—such as China’s electric vehicle sales and global carbon markets—have seen setbacks. In this podcast, our experts discuss the critical issues in 2020 that will shed light on the future pace and nature of the energy transition.
    Tue, Jan 14, 2020
  • The year 2020, and indeed the coming decade, promises to bring rapid and jarring shifts to the energy industry. In this 2020 Outlook, the Research & Advisory team outlines important trends across oil and gas/LNG markets, geopolitics, corporate strategy and the energy transition. Oil markets head into 2020 with continued uncertainties around demand. Despite Opec’s best efforts, we see near-term cyclical factors as well as longer-term secular headwinds weighing on the demand outlook. Global LNG markets are headed for chronic oversupply. Qatar fights to maintain market share, while dominant incumbents look downstream and try to bolster their trading capabilities. The industry will continue to grapple with energy transition pressures in 2020, with most companies still needing to outline a clear way forward. Geopolitical risks, ranging from the Middle East to even the US, still loom large in 2020.
    Sun, Dec 15, 2019
  • Drivers of the medium-term oil and gas industry outlook have shifted markedly in just the past year, with companies and producing countries facing rising scrutiny over their strategies for the energy transition. We expect the trajectory of the shift to a low-carbon energy system will be the most critical variable impacting the oil and gas industry through 2030. This Macro Trends Outlook presents an updated scenarios framework that incorporates these important developments. It then analyzes key signposts in 2020 that will provide indications of how industry conditions will unfold. We currently see our Extended Abundance scenario as the most likely into the early 2020s, but outcomes could vary substantially given the potential pace of change in the coming years.
    Wed, Dec 4, 2019
  • Electric vehicle (EV) sales in China have been a bright spot in an otherwise slumping automotive sector, but they have been slowing since mid-2019. Beijing enacted changes in subsidies in June, and economic weakness is also a factor, as GDP growth slowed to a 30-year low of 6% in the third quarter. While there are near-term limits to Chinese EV demand, the shift away from direct purchase subsidies will likely lead to a more stable and consolidated market in the longer term. Competition will also rise with several foreign automotive companies poised to increase investment in the coming decade. China’s EV market remains well-positioned to follow our Mid-Case scenario.
    Sun, Nov 24, 2019
  • The oil and gas industry has upped its engagement on climate issues, but companies still need to embrace deeper change, in order to manage rising risks from a low-carbon energy transition. Companies that have offered only minimal responses to climate concerns to date—including most national oil companies (NOCs)—will face ongoing pressure to integrate the energy transition into their corporate strategy. At the same time even those international oil companies (IOCs) with more advanced climate positioning will be pushed to develop genuinely transformational strategies. All industry players will face growing demands from investors, governments and society to demonstrate concrete, quantifiable progress toward Paris emissions goals. How far and fast these pressures increase will be a chief driver of the industry’s trajectory through the 2020s.
    Wed, Nov 20, 2019
  • Energy transition risks continue to grow, forcing oil and gas companies to develop new strategies, as assessed in our updated benchmark of 25 companies. We see companies struggling to strike the difficult balance between hitting short-term profit goals, meeting growing global energy demand, and providing more compelling narratives to meet the climate challenge. Three main behavior groups have emerged from this analysis, ranging from Advancing Transition to Minimal Response. At the same time, growing focus on emissions data will require more concrete company efforts to decarbonize operations and cut the overall emissions footprint of end-use products. The pressures facing national and international oil companies differ notably, as will their future priorities.
    Mon, Nov 11, 2019
  • Three recent US LNG project announcements—by LNG Limited, Tellurian and Cheniere Energy—are important indicators of ventures’ progress in general in reaching final investment decisions (FID). The differing commercial approaches are indicative of efforts to promote ventures in a much different market environment compared to when ‘first wave’ projects were sanctioned. The intense focus on the minutiae of differing commercial models is understandable, but ultimately project cost will remain the most critical issue as the LNG trade becomes increasingly commoditized. Several ventures heading toward an FID are using growing associated Permian gas to support development to keep costs low and allow for diverse pricing mechanisms. Recent FIDs not only highlight the importance of cost—as well as portfolio player support—but also reinforce our expectations that near-term FIDs will exceed 40 million tons per year, with the potential for other ventures to advance later in 2020.
    Sun, Nov 10, 2019
  • With the International Maritime Organization (IMO) low-sulfur fuel mandate taking effect in less than two months, low- and high-sulfur fuel pricing and cracks are showing signs that the physical market is adjusting. Both supply- and demand-side industry segments are adapting and trending toward around 80% compliance by early next year. Compliance will gradually rise in 2020, averaging 85%. Yet, some implementation challenges early next year should be expected. In particular, shippers are delaying the purchase of compliant fuels and raising concerns around testing and compatibility.
    Mon, Nov 4, 2019
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