Conventional Energy

Conventional Energy

The oil and gas industry is expected to experience a slow recovery on account of rising production by the upstream companies, which in turn is augmenting the growth of the midstream companies as well. High supply is expected is expected weaken the oil prices in the coming years. However, the prices of natural gas is expected to benefit from high demand, however price gains will be restricted. Price of Brent crude oil was valued at US$ 50 per barrel in 2017, compared to US$ 45 per barrel in 2016.

Oversupply, rise in U.S. crude stock, delayed production in the OPEC countries such as Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, U.A.E., Qatar and Indonesia among others, and increase in dollar value are some of the factors that had affected the crude oil price in 2016. Decline in crude prices resulted in lower revenue for the oil exporting countries, due to which several OPEC countries suffered financial loss. However, the OPEC countries had to maintain the production far beyond in order to keep the economic activities running smoothly.

The oil and gas industry is expected to project a sluggish growth in the emerging economies such as China and India. Despite this, the global growth averaged at 3.5% in 2017, compared to 3.1% in the previous year. Sluggish growth of the oil and gas industry in India and China are expected to be compensated by steady growth in Japan, Brazil, U.S and the Eurozone. According to Insights and Reports, the global demand for oil is anticipated to expand by 1.21 barrels to more than 95 million barrels on a daily basis. Oil demand is expected to increase from 4.44 million barrels per day in 2016 to 4.52 million barrels per day in 2017.

According to Insights and Reports, declining oil prices proved to be boon for the Indian market. Crude and petroleum imports in the country witnessed a rapid decline from US$ 100 billion in 2013 to less than US$ 50 billion in 2016. However during the same period import volume increased from 140 million tons to more than 170 million tons. Further, during the same period, the value of liquefied natural gas dropped to US$ 6.4 billion from US$ 7.8 billion, despite a rise a in the volume of imports from 12.6 million tons 15 .4 million tons. Lower prices of oil and LNG proved to be beneficial for the Indian economy as the cost of energy became affordable.