The enormous challenges triggered by the COVID-19 pandemic this year have caused major disruptions to the global oil and gas industry resulting in thousands of lay-offs, multiple shut-ins and mounting uncertainties about the future of petroleum exploration and production.
Although offshore activities in Guyana have so far continued largely unaffected, the global industry outlook will no doubt ultimately have an impact on operations in the South American country if the downward spiral continued indefinitely.
But there is light at the end of the tunnel. The American Petroleum Institute’s (API) Industry Outlook for Q3 2020 released on Thursday shows the global economy, oil and natural gas markets, have made noteworthy progress toward rebalancing and normalizing. This, API Chief Economist, Dr. Dean Foreman says is encouraging news for the industry and consumers alike.
“2020 is broadly expected to be a ‘one-and-done’ economic recession, keyed by emerging markets. Beginning in Q3 2020, global oil demand appeared to exceed supply and could support prices of about $50 per barrel in 2021 per the U.S. Energy Information Administration,” Dr. Foreman said, in recounting some of the highlights of the API Industry Outlook report.
According to the API Outlook, Bloomberg consensus expects economic recovery to take hold beginning in Q3 2020. “Consistent with the Bloomberg consensus, World Bank expect global economic growth to resume in 2021, and oil consumption has historically grown in tandem with the economy,” the report said.
In Q3 2020, oil demand among OECD economies fell by 4.7 million barrels per day, compared with 2.4 mb/d among Non-OECD economies, according to the US Energy Information Administration (EIA).
“By contrast, Q3 2020 global supply was down by 9.7 million barrels per day compared with one year ago with cuts led by OPEC nations,” API said in its Q3 2020 Industry Outlook.
Dr. Foreman has said Guyana’s oil economy is likely to withstand the current low-price environment since its projected economic growth from oil revenues and the quality of its oil, which the industry considers a niche product, will work in the country’s favour.
“What swings in the balance for Guyana is tremendous economic and social value by virtue of the new oil development…the kinds of increases for Gross Domestic Product and all of the social benefits to social development that go with that,” he told local reporters via Skype in March, noting that it is rare for a country to have this kind of takeoff point in their economy within a period of four years.
Since 2015, ExxonMobil has made 18 discoveries offshore Guyana amounting to well over 8 billion barrels of oil equivalent resources. Oil production began in the country last December.