The energy industry, although is on its way to recover from a very difficult year, the 2020, it will see a rebalance by 2022, Lorenzo Simonelli, Baker Hughes CEO, said during CERAWeek this Monday.
“As you look at supply and demand equation, we’re seeing that there will be a recovery in 2021; with an even more balanced market going into 2022,” he remarked during his intervention in CERAWeek by IHS Markit.
As we reported previously, 2020 saw the insurgence of a pandemic that caused major disruptions in almost every industrial and productive sector in the world. For the energy industry specifically, it meant the practical crush of oil demand, thus, the collapse of prices to below cero levels.
Consequently, investors and asset operators curtailed funding, investing and production. However, the vaccine race met favorable results, and the vaccine rollout started a year after the outbreak, a record time.
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Simonelli says on CERAWeek industry remains cautiously optimistic
Since the first vaccine rollout in December, hopes for recovery have spread rapidly among countries and economies. Nevertheless, specialist groups like the Organization of Petroleum Exporting Countries has kept those illusions grounded; as 2021 may still see some complications.
Lorenzo Simonelli shared that opinion on CERAWeek; but also add that by 2022 the energy sector will likely return to a balance; funding, investments and capital expenditures will restart. In fact: “hydrocarbons are still going to be essential for providing energy to the world, especially in the near term,” he said.
He also noted: “2020 will be remembered as the year in which the energy transition increased at pace; however, there are still over 1 billion without access to ongoing energy; and energy will be vital in the future, so we have to address energy transition; but also affordable energy being available for people.”
Finally, he noted. “However, we have to remain cautiously optimistic; from an investment perspective is going to be driven by demand outlook. As that outlook recovers in the second half of 21, and rebalances for 2022, we’ll see production increases in lower cost basins and the middle east.”