Malaysia’s Petronas says COVID-19 variants will keep oil demand uncertain

General view of a Petronas gas station in Serdang, Malaysia March 4, 2021. REUTERS/Lim Huey Teng

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KUALA LUMPUR, Dec 28 (Reuters) – Malaysia’s state-owned energy company Petronas said on Tuesday it expected the recovery in oil demand from the impact of the coronavirus pandemic to remain fragile and uncertain over the next few years.

The industry was optimistic about economic recovery but remained cautious and needed to be prepared for oil price volatility, Petronas said in its 2022-24 business outlook report.

“The path to a sustained recovery in oil demand remains fragile and uncertain due to the emergence of new variants of COVID-19 that are triggering new waves of lockdowns,” Malaysia’s oil resource guardian said.

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Oil prices fell in November due to the new Omicron variant, but have largely recovered and are up around 50% this year, supported by improved demand and supply cuts by the Organization oil-exporting countries and its allies.

After 2024, Petronas forecasts a positive outlook for the drilling rig business and a stable outlook for the manufacturing of fixed structures and underwater installations, as it continues its efforts to monetize its oil and gas resources.

Liquefied natural gas spot prices are expected to be volatile in coming years due to weather conditions and potential political shifts that could alter supply and demand dynamics, he said.

Petronas said many of its current oil and gas projects should be ready for connection and commissioning by 2023 and 2024.

While many projects had to be postponed and streamlined due to the pandemic, those that survived are only expected to resume and reach peak production in 2025, he said.

Petronas also said it is targeting domestic hydrogen production from 2024, starting with so-called blue hydrogen, which uses natural gas as a feedstock, then moving to green hydrogen, which uses carbon dioxide. ‘water.

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Reporting by Liz Lee; Editing by Kenneth Maxwell and Richard Pullin

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Steve R. Hansen