The novel coronavirus (COVID-19) pandemic is remembered as the most damaging event in the energy sector in modern history and its impacts are expected to continue for several years. Although global oil reserves have decreased and expectations for the second half of this year and 2022 on-demand have improved, the oil market has not left the “depression” caused by the pandemics. It means that the probability of re-increase of coronavirus infection cases should not be ignored.
It should be noted that the pandemic has really affected the situation in the energy market greatly and certainly, left traces on the “body” of the important sector of the global economy, which can not be removed for many years yet. Despite it, although it is difficult, a recovery way has started. Although international financial and specialized organizations are careful while forecasting, many experts are commenting positively.
All of these are not baseless words, facts say based on numbers in this regard. Thus, according to the information of the International Energy Agency, in 2020, demand for global energy decreased by 5% and energy investments by 18% and this, in turn, has significantly changed forecasts for global energy markets. According to the forecasts before the pandemic, demand for global energy was expected to increase by 12% in 2019-2030. Under the current conditions, demand growth is projected at 9% for the optimistic scenario and 4% for the pessimistic scenario.
Despite this, probably, in 2030, 80% of the increase in electricity demand will fall on the share of renewable energy sources. The largest increase in hydrocarbon resources will be observed in natural gas. According to the forecasts of IEA, over the next 20 years, at least 30% growth will be recorded in global natural gas demand.
When speaking about the energy market, it should be emphasized that the oil field has been suffered and affected mostly by pandemics. Global oil demand has decreased for the first time since 2009 global oil crisis. The process of self-isolation, the closure of borders among states, the restriction of industrial enterprises, refineries has led to excessive supply in the oil market, which ultimately led to a sharp drop in oil prices. All this has seriously affected not only the economies of separate countries but also the global economy. According to the calculations of OPEC, in 2020, world oil consumption decreased by 9,6 million barrels per day and dropped to 90,4 million barrels.
Oil consumption sharply declined as 60% of the world population subjected to a strict quarantine regime against the background of the beginning of the pandemic, in March-April 2020. The disbalance between supply and demand rose to about 35 mln. barrels in April 2020. However, the gap between supply and demand has been gradually narrowing since May 2020 amid easing quarantine restrictions and a reduction in oil production of 9.7 million barrels per day under the OPEC + (non-OPEC initiative).
It should be added that Azerbaijan has also contributed to the stabilization of the global oil market within the OPEC + agreement. The country has fully fulfilled its obligations under the agreement and thus demonstrates its determination to solve the problems of the industry. Efforts to reduce coronavirus infection and the work of OPEC + and other countries have led to optimism about global oil consumption forecasts. According to the US Energy Information Administration (EIA), global oil consumption in 2021 will average 97.5 million barrels, which is 5.3 million barrels more than in 2020. In 2022, oil consumption will increase by at least 3.8 million barrels to 101.3 million barrels.
OPEC and IEA’s forecasts on global oil demand are also positive. Both organizations changed their forecast on oil demand in a positive direction since March. IEA’s report World Energy Outlook 2020 published in 2020 forecasted that global oil demand will return to its previous level only in 2023. However, the report published in June of the current year says that oil demand may return to the pre-pandemic level in 2022. The main reason for this is the rapid implementation of the vaccination process on a global scale and the restoration of global economic activity. According to the forecasts of OPEC, lifting COVID-19 restrictions and speeding up the vaccination process will give impetus to increase oil demand. In this framework balance between supply and demand will be restored in the second half of the current year. Even 2 mln. barrels additional oil supply will be needed in order to meet the demand towards the end of the year.
Although positive forecasts on oil demand are given in the short term, IEA forecasts a growth rate of oil demand will decrease in the next five years. Thus, before the pandemic, although demand in 2019-2025 is forecasted to increase an average of 1.5 million barrels per day, at present, this figure is expected to reach an average of 1 million barrels after 2021. The main reason for it is the rapid increase in the number of electric cars and a strategy for the transition to green energy on a global scale. Already, 17 countries have made zero carbon emissions a priority in the transport sector by 2050.
Touching upon the situation in the global energy market the issue of natural gas should not be overlooked. Although the pandemic impact to this field, it has not been so noticeable. After 1,9% decrease was recorded in global natural gas consumption in 2020, the demand is expected to restore again in 2021 and to exceed the pre-pandemic level. On the one hand, relatively mild weather, and on the other hand due to pandemic, implementation of tight quarantine regime restrictions paved the way decrease of demand on a global scale last year. Despite this according to the forecasts, in comparison to the results of 2020, global natural gas consumption will increase by 3,2% or 123 bln. cubic meters in the current year. It is 1,3% more comparing with the indicator of 2019.
Although many countries, including Azerbaijan, are making great efforts to reduce greenhouse gas emissions, alternative and renewable energy sources, and some experts believe that natural gas will play the role of the least environmentally friendly energy carrier among hydrocarbons in the next 2-3 decades. Azerbaijan is currently actively working to increase gas production and exports, and there is potential for this. Thus, Azerbaijan's proven gas reserves - 2.6 trillion cubic meters, but these are only approved figures because Azerbaijan has a number of promising structures in the Caspian Sea, which creates great opportunities to increase the country's gas export potential.
In conclusion, it should be noted that the global energy market is facing an unprecedented crisis and it will take several years to overcome this situation. However, due to the joint efforts of many countries, organizations, and structures, it was possible to quickly stop the process of the sector entering a deep crisis.
At present, oil prices exceed $ 75 per barrel, which is the main evidence of this. The facts, figures, and positive forecasts suggest that the recovery of the global energy market and the return of the pandemic to previous levels will take shorter than previously expected. However, the pandemic and its aftermath have shown how interconnected and fragile everything in the world is, and how a small virus threatens the lives and foundations of millions of people, their economic interests, and the entire global economy. Although the global energy market is still fragile at the moment, it is moving upwards. But the main thing is that the process of self-recovery started on time and continues rapidly...