MENA Gas & Petrochemicals Investment Outlook 2020-2024
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2020 is witnessing one of the largest gas demand shocks on record, with a year-on-year (y-o-y) reduction of 4%. This stands in stark contrast to 2019 which was a record year for LNG Final Investment Decisions (FIDs). The 2020 global crisis is expected to reduce the annual growth rate for global gas demand for the period 2020-25 to 1.5% compared to the pre-COVID-19 estimate of 1.8%. |
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The triple crisis—health, economic and potentially financial currently affecting the world, led to sharp cuts in capital expenditures, practical restrictions to projects and supply chains—Asian shipyards or specialized engineering from the Lombardy region in Italy—and a wider restructuring of the sector. Entering 2020, MENA countries had substantial financial reserves, almost USD1tn, and some countries were even underleveraged. Yet with governments mobilizing extensive stimulus packages to fight the direct and indirect effects of the COVID-19 pandemic, the five-year energy investment plans, even if reduced by 20%, will still require substantial input from a bearish private sector. The current vicious circle of low revenue, low investment, low output needs to be broken, and a virtuous cycle of investments in lower cost, lower-carbon, sustainable assets needs to be induced |
