Big Oil Focusing On Natural Gas Developments This 2020, Says GlobalData

Natural gas reserves
Natural gas reserves

By Akanimo Sampson

A leading data and analytics company, GlobalData, says Final Investment Decisions (FIDs) planned across the oil and gas value chain this 2020 are set to focus on natural gas developments.

FID is, however, the final decision of the Capital Investment Decision (CID) as a part of the long term corporate finance decisions based on key criteria to manage the company’s assets and capital structures. In general, the FID can be made after completion of permits and financial arrangements, and ready for commencement of the construction works at the Site (EPC Contract). It is the point at which contracts for all major equipment can be placed, allowing procurement and construction to proceed and engineering to be completed.

The company’s report, Global Oil & Gas FIDs in 2020, reveals that FIDs targeted for this year in the upstream and midstream sectors are heavily weighted towards gas and Liquefied Natural Gas (LNG). This includes projects in the leading LNG exporters of Australia and Qatar, as well as in the key growth regions of North America and Africa.

Managing Oil and Gas Analyst at GlobalData, Will Scargill, comments: “The world is increasingly looking to natural gas as a transition fuel and the rise of LNG is facilitating this shift, particularly for major Asian economies. However, the high level of competition for market share in the mid-2020s combined with high capex requirements may mean that not all projects make the cut.”

In the downstream sector, the development of new projects is expected to be focused in the petrochemicals segment over refineries. The demand growth centers of India and China contribute the most projects, but a number of new developments are also targeting FID in the US and Russia.

Continuing, Scargill added,“plans for new petrochemical capacity in the US are more evidence of natural gas shaping the industry. The shale gas boom has provided cheap ethane feedstock driving rapid growth after years of stagnation.”