The global energy sector has been hitting unchartered territories as COVID-19 demand destruction, economic downturn and overproduction hit the market from all sides. The unexpected May 2020 WTI negative oil futures crisis, combined with continuing demand destruction and possible peak-demand scenarios, has shook the hydrocarbon sector in its fundamentals. At the same time, renewables energy is not yet out of the doldrums itself.
With continuing economic downturn, and possible 1930s economic fallout scenarios in place, questions are being raised on the future of hydrocarbon and renewables sector developments and investments the coming years. Without knowing the full impact of the current crisis, especially on the demand and manufacturing side, energy futures are heading for a perfect storm. IOCs and NOCs will have to reassess their futures, as private investors, institutionals and governments will be hesitant to continue the former investment sprees. Negative prices have shook the sector, but a real knock-out is not there.
The future of renewables and hydrocarbon will not only depend on political views and activism, but also on commercial factors, ROIs and price levels. The new normal could be a more strong equilibrium between both sides, as a full scale focus on one sector only will be having a detrimental effect on all. It seems that renewables will be leading OECD investments, diminishing the role of IOCs, while hydrocarbon will become a power play of national hydrocarbon giants or non-OECD Sovereign Wealth Funds.
- From negative oil and power prices to a new normal? How to get there, market or government driven?
- Restructuring of energy markets the coming decade doesn’t mean end of hydrocarbons
- Economic downturn to decide OECD energy investment future
- Renewables to lead OECD, hydrocarbons to be NOCs based
- COVID-19 watershed in leading hydrocarbon media exposure? From energy to products?
- Total restructuring energy sector to decide new geopolitical power constellation…How to deal with negative prices and power levels?
- The end of IOCs, after Shell’s dividend announcement, opens door for new reality?