John Scrimgeour, Archer Knight’s chairman, on what to look out for in 2021
What can we expect to happen in energy markets in 2021?
No industry was immune to the impacts of COVID-19 in 2020. For oil and gas, the impact was particularly acute as global lockdowns and quarantine measures led to an unprecedented drop in oil demand. The industry will be watching every pick up in activity closely as we move into 2021.
At its height, the virus caused oil demand to drop more than a quarter from pre-pandemic levels of around 100 million barrels per day. Before 2020, oil demand was increasing by about 1 million barrels per day. Can it return to these levels of growth? Well, already oil demand has recovered much of its fall from this year and this recovery should continue in 2021.
There has been a very public move to renewables this year, with companies like BP and Shell expanding their net-zero visions. Offshore wind and other cleantech promise to be a much larger slice of the energy mix from now on.
But these percentage gains partly mask the fact that world energy demand is increasing so fast that fossil-fuel production has had to grow to fill the gap.
Capital expenditure in the oil field has dropped, caused by the drop in demand, the lower oil price and the investment community’s growing reluctance to fund oil & gas projects. This has eroded production capacity.
At some point I expect there to be a market inflection where oil demand surpasses supply. This will cause an uptick in investment in oil, which I believe will be focused on incremental and near-field production that can be brought onstream in a short timeframe, to benefit from an increase in the oil price that might only be shortlived.
“The industry will be watching every pick -up in activity closely as we move into 2021.”
What are Archer Knight’s priorities for 2021?
The market is changing, and Archer Knight’s market intelligence is constantly adapting to keep our clients ahead of the curve. Since its launch this year, Flowline, our software-as-a-service platform has expanded to include floating and fixed offshore wind projects, rig data and more interactive functions to help clients identify the best opportunities.
In 2021, Flowline will continue to have detailed and continuous up-to-date monitoring of the offshore oil & gas, and offshore wind markets, helping service companies position themselves to benefit as the market continues to evolve.
“Archer Knight’s market intelligence is constantly adapting to keep our clients ahead of the curve.”