With the rapid spread of Coronavirus (COVID-19) across the globe, the energy sector is suffering from the impending losses both in employment and revenue. Unfortunately, our transition to a 100 percent clean future powered by renewable energy seems diminishing at this moment.
This article assesses the impacts of coronavirus on the energy sector (both renewable and non-renewable):
Oil Demand and Prices
In June 2020, oil prices fell more than 2 percent (prices are decreasing gradually from March), and simultaneously, U.S crude stockpiles hit an all-time high. The U.S. Federal reserve itself has admitted that it would take years to get fully recovered from this situation.
On the other hand, we have seen prices get up in different parts of the world based on recent positive economic forecasts but there is still an uncertainty factor prevailing.
This uncertainty is driven by the way that the monetary downturn has not been brought about by economic weakness but rather by outer variables: a pandemic and governments' reaction to the pandemic, neither of which adjusts with past monetary downturns or recuperation endeavors. Those components make a modeling of the economic future incredibly complex and hazardous.
Liquefied Natural Gas
Due to the decline in economic and industrial activity triggered by COVID-19, the LNG sector is facing a lot of challenges.
Indeed, even before the pandemic, members in the LNG business were portraying 2019 as a tempestuous year. Starting in the winter of 2018/2019, the blend of over-supply of LNG (incompletely because of new supply from the US), more fragile interest in Asian markets, and hotter climate caused the start of a multi-month disintegration of conveyed LNG prices in worldwide markets.
While the pattern towards an over-supply and low-price condition is great for LNG purchasers, it makes huge obstacles for the LNG industry. Low (or negative) margins prevent interest in new undertakings by LNG providers and altogether compel the accessibility of sources of financing for new LNG ventures.
Norvergence believes that the energy sector is changing following the exceptional difficulties introduced by COVID-19. The shock experienced in the course of the last few months ought not to dominate the continuing development of the energy sector's noticeable quality and prominence in the energy transition or change story.
There is a greater picture. Huge, however not seismic, operational, and legally binding adjustments have and will be made inside the energy industry to guarantee its enduring development.
(The views expressed in the article are the author’s own. Let Me Breathe neither endorses nor is responsible for them.)