The Big Oil’s are making biggest investments in the petrochemicals. The term “Big Oil” refers to the world’s top oil and gas producing companies. In recent times these companies are shifting the investment tactics from being merely involved in petroleum production to now shifting the focus on petrochemicals. Major economies of the world are entering in the EV revolution. The emerging global markets such as India, China, Middle East, and Africa are all tilting towards electrification drive. That EV and electrification drive has induced the oil and gas producing companies to shift their focus so that they can keep afloat in times of circumstantial changes.
The last year report by Bloomberg forecast that the global demand of road fuel will increase to reach its highest in 2027 and since then it will be declining forever. In 2027, the oil and gas industry will be producing 49 million barrels per day for meeting daily consumption demands which will be all time high. Since then the industry will be going through a major shift in the energy sector.
How Big Oil’s are Making Significant Shifts?
As per the International Energy Agency’s reports, the global oil demand is currently in the midst of slowdown and is expected to ease to 1.2 million barrels per day this year. Saudi Arabia has already cut down the production rates because of voluntary reasons and expected dip in global oil demands. The biggest oil and gas producing companies worldwide to name a few ExxonMobil, Shell, TotoalEnergies, Saudi Aramco, and Hindustan petroleum, Chevron Corp., PetroChina Co. Ltd and China Petroleum & Chemical Corp. are shifting the investments from oil and gas production to petrochemicals.
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Therefore these companies are making biggest investments in the petrochemicals so that they can invest in the futuristic developmental projects. One of the major impacts on the oil and gas producing companies will be left by the Chinese EV sector. As there is a worldwide EV drive, the Chinese EV market is going to disrupt the global fossil fuel industry. Saudi Aramco has already reduce the increase in the production instead it opted to buy major stakes in the Shenzhen listed Rongsheng petrochemicals. It bought 10% stake in the petrochemical manufacturing company for $3.6 billion last year, a move to boost the EV and divert the investment for futuristic development.
Not only the Shenzhen listed company, but the Saudi Aramco has been engaging in talks with the Hengli Petrochemicals to buy major stake in the company. The Hengli Petrochemicals are considered a top producer in the Petrochemicals market in China. It has stepped up its efforts as it has struck a deal the South Korea. Last year, Aramco owned S-Oil has broken ground on a $7 billion petrochemical factory in South Korea.
How EVs will Revolutionize the Petrochemicals Investments?
According to a Bloomberg report, the global market of electric vehicles is going to be worth $951 billion by 2030. It has a lot of potential to divert the current oil and gas investments. The official statistics has revealed that the annual electric vehicle sale is going to reach 30 million units. Not only there will be an increase in EVs but also the technological advancements and cost reduction will step up the wheel of growth. And for that green energy will be required which will eventually sideline the current energy sector which is largely dependent on oil and gas.
China will pose the biggest threat to the oil and gas industry as it has emerged as the world biggest EV market in 2024. More than 60% of worldwide EV sales are attributed to the republican country. And the EV industry does not use products made from petrochemicals and their derivatives. The EV market is the emerging futuristic market in the auto mobile industry. And it will pose the biggest threat to the oil and gas industry which will negatively affect the world’s top oil producing companies and the nations of which economic growth is determined by the production of petroleum products. The Middle East and OPEC countries will be the most affected ones from this EV transition.
What are Big Oil’s Top Investments?
These big oil companies are betting on petrochemicals which include use of plastics, polyesters, nylon, acrylic and etc. Down the line, the ExxonMobil is planning to invest over $20 billion in the next three years in production of plastics. The CPChem is going to invest around $14.5 billion while the Dow Inc is planning to invest around $10 billion in the production of petrochemicals.
And Chine leading the manufacturing in petrochemicals, most of these big investments are in to the market of China as it is the leading force. Two major brands in production of petrochemicals are Hengli and Rongsheng from China. They are spending billions in setting up chemical plant to replace gasoline and diesel.
Exxon is currently building a petrochemical factory in the southern China’s Guangdong province along with increasing the existing facilities at the US Gulf Coast.
It can be concluded that the shift of big oil companies will mark the beginning of a new future. It will be environmentally sustainable and futuristic in its approach.
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