BAKU, Azerbaijan, May 5
By Leman Zeynalova – Trend:
The gaps along the oil and gas supply chain as a result of COVID-19 will take some time to fix, Trend reports citing GlobalData, a leading data and analytics company.
Ravindra Puranik, oil and gas analyst at GlobalData, pointed out that this disease is destroying global oil and gas demand and unsettling the entire ecosystem.
“Daily activities of producers, equipment and service providers, engineering procurement and construction (EPC) contractors, storage and transportation companies, fleet operators, traders and marketers are now either delayed or canceled,” noted the expert.
He pointed out that lack of demand is weighing on liquid storage, which is now edging towards full capacity. “Consequently, oil producers and traders are turning to oil tankers as floating storage, thus leading to a surge in tanker chartering rates.”
“Moreover, regulatory constraints introduced for containing COVID-19 are limiting workforce availability and affecting throughput at oil and gas facilities and import-export terminals alike. Factory closures are also affecting equipment supply and resulting in project delays and postponements across the value chain,” said the analyst.
The International Energy Agency (IEA) anticipates the fall in oil demand from COVID-19 to be 29 million barrels per day (bpd) for April 2020 and 23.1 million bpd for Q2 2020. Although OPEC+ members have agreed to cut 9.7 million bpd of their output to offset the demand slowdown, supply is likely to be in excess of the demand in the near future as long as the disease persists.
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