The latest International Energy Agency (IEA) report doesn’t paint a colorful picture for the energy sector this year. According to it, the pandemic has caused the most significant decline in global energy investment in history.
Due to the pandemic, the world is at a standstill. Alongside other restrictions, specialists believe that the energy sector will face the most significant economic downturn since the 1930s Great Depression.
At the beginning of the year, the IEA recorded a 2% growth in energy investment, which was the most extensive rise in spending in the past couple of years. But, as the pandemic developed, the investment will decrease by 20% compared to the previous year. Money-wise, the energy sector will lose approximately $400 billion.
Moreover, the energy sector's revenue will fall by more than $1 trillion this year, as the falling demand, alongside lower than usual energy prices and the rise of unpaid bills, made it happen. For Oil, the funding dropped by 30%, whereas for coal by 15%. Shell gas investments are to drop by 50%. The requests for coal-based plants have decreased by more than 80% from 2015 until now. On top of that, for short time the Oil prices turned negative for the first time in history. Now, prices partially rebounded and Brent Oil alongside Oil, trade at around $35 per barrel. Heating Oil trades at around $25. The changes affected also the companies that prove and work with such type of energy. For example, Exxon is expected to cut its output by approximately 74,000 bpd between May and June. On the other side, for the month of May, Chevron will cut around 66,000 bpd, and the number will reach 80,000 bpd in June.
On the other hand, the use of renewable, clean energy technology grew. This year will see an increase of around 40%, but the report continues by saying that it won't be a permanent change once people resume their activities: "Remember the 2008-2009 crashes. We immediately saw a decline in emissions, but afterward, it rebounded. We must learn from history."
Despite all, the Oil demand will rise again, starting 2021 from this year's 91 million BPD. Until 2040, the consumption will be around 106 million BPD.
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Sources: worldoil.com, forexlive.com, cncbc.com, bbc.com
