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April 23, 2020

The impact of Covid-19 on the oil and gas supply chain

By GlobalData Energy

The Covid-19 pandemic has infected over two million people in more than 180 countries. With no vaccine available on the disease, social distancing seems to be the only viable approach to limit the spread of the disease. This approach is directly affecting global travel & logistics and material handling. Industrial activity has also slowed down worldwide. This unprecedented catastrophe is destroying global oil and gas demand and unsettling the entire ecosystem. Daily activities of producers, equipment and service providers, EPC contractors, storage and transportation companies, fleet operators, traders, and marketers are getting delayed or cancelled. This is potentially creating gaps along the oil and gas supply chain, which might take a while to fix.

Lack of demand is weighing on liquid storages, which are now fast edging towards full capacity. Consequently, oil producers and traders are turning to oil tankers as floating storages, thus leading to surge in tanker chartering rates. Moreover, regulatory constraints introduced for containing Covid-19 are limiting workforce availability and affecting throughput at oil and gas facilities and import-export terminals alike. Factory closures are also affecting equipment supply and resulting in project delays and postponements across the value chain.

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