The COVID-19 pandemic has had a profound impact on the energy sector. Writing in Euractiv, Simon Redmond and Elena Anankina, Senior Directors at S&P Global Ratings, analyse the contrasting effects of the outbreak on the oil and natural gas sectors, and the implications for the wider energy transition.
Oil has suffered the most pronounced short-term impact of all energy sources, with demand falling by over 20 million barrels a day in March and April 2020 alone. On the other hand, gas has remained relatively resilient to the immediate impacts of the pandemic.
The downside for gas, rather, is expected to be longer term: its role as a “bridge fuel” is set to be shortened by an expedited transition to renewables. And, while oil demand has taken a short-term hit, its long term trajectory is set to be largely unchanged. The full article, in Euractiv, can be found here.
In an article for Energy Voice – a magazine focusing on the renewable, oil, and gas sectors – Simon Redmond, a commodities specialist at S&P Global Ratings, outlines the ‘top ten’ developments to watch out for in the liquefied natural gas (LNG) market.
Redmond explains that while LNG has historically maintained a relatively stable price, the coming months will likely see increased market volatility as demand declines, production continues at similar rates and the resulting global glut diminishes unit prices.
“In order to reflect the new ‘low-price’ environment, LNG contracts are being re-negotiated to favour utilities and off-takers over the traditionally favoured producers,” according to Redmond.
As a result – and given tighter profit margins – Redmond warns that LNG projects may take longer to repay their debts, meaning an adverse impact on related credit ratings could be on the cards. He also notes that despite the current glut, the need to entice investors to capital intensive LNG projects should continue to drive producers’ strategy, efficiency and, in turn, profits.
To read the full article, please click here.