The global Covid-19 outbreak has impacted the entire oil and gas value chain, including the petrochemicals industry, leading to capital expenditure cuts, production decline, postponement of FIDs, drop-in refinery capacity utilization, etc.
However, given the wide-spread applications of petrochemicals in automotive, packaging, electronics, fertilizers, and medical equipment industries among others, it is expected to be one of the quickest to recover, once the dust settles around Covid-19.
This is further reinforced by a recent poll conducted by GlobalData, which shows that around 32 percent of the respondents believe the petrochemicals segment can outpace other oil and gas segments in terms of recovery post-Covid-19.
The respondents (26 percent each) expect refinery and upstream as the segments next in line to petrochemicals for growth after Covid-19.
As the stringent measures to contain the pandemic such as lockdowns have eased leading to the gradual recovery of the global economy, major refining countries, such as the US, China and India are expected to ramp up utilization of refinery capacity to meet the increase in demand. This can lead to a surge in refinery activity and the recovery of the sector.
On the other hand, the decision by the OPEC+ group to ease the production cuts to nearly 7.7 million barrels per day (mmbd) from the earlier cuts of 9.7 mmbd is likely to push the crude oil production rates in near future.
However, the overall global production growth is likely to be less, as countries such as Nigeria and Iraq have agreed to increase production cuts to make up for their low compliance during the last three months.
Across the value chain, only 15 percent of respondents opined the midstream sector can have a faster recovery after Covid-19.
Although the oil and gas sector showing signs of gradual improvement on a whole, it may not immediately lead to the growth of the midstream sector as the focus might be more on upstream, refinery and petrochemicals sectors for investments post Covid-19.