Editorial comment
It’s that time of year when forecasters get out their crystal balls and start to make predictions for the year ahead. As ever, uncertainties seem greater than normal (perhaps a sign that things are always extremely uncertain). But there are a few known unknowns which signal that 2024 is going to be very eventful.
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We enter the new year in stormy geopolitical waters, with the ongoing Russia-Ukraine war, conflict in the Middle East, and rising tensions in the Taiwan Strait. And 2024 has been touted as the ‘year of elections’, with more than 50 countries around the world taking to the polls, including the US, India, Taiwan, and the UK. The EU will also hold parliamentary elections in June. These events alone point to a year of great uncertainty – and potentially great change – and they will likely have a significant impact on the energy sector.
According to Deloitte’s ‘2024 oil and gas industry outlook’, the sector will be shaped by four disruptors that will influence supply and demand, as well as trade and investment, namely: geopolitical factors, macroeconomic variables (such as high interest rates and rising material costs), evolving policies and regulations, and the emergence of new technologies.1 In the report, Deloitte explores a number of trends and industry drivers that it expects to play an important role in shaping the strategies and priorities of companies in the oil and gas sector in the year ahead. Unsurprisingly, the energy transition (allocating capital and executing clean energy policies) features heavily, as does embracing growing dynamism in global energy trade, and harnessing the power of new technology, including generative AI.
Deloitte also highlights that the downstream sector is facing a “pivotal moment”, as the industry brings new products to market to offset the expected longer-term decline in demand for fossil fuels in the transport sector. The report states: “The gap between rising low-carbon fuel alternatives and slowing but still positive oil demand expansion can offer a window for refiners to plan their transition without risking the disruption of financial stability.” As such, refiners can craft strategic pathways within a number of realms – including biofuels, hydrogen and ammonia, electric vehicles, chemicals and CCUS – in order to achieve success in the energy transition. For more on this, I’d encourage you to read Deloitte’s report in full (link at the bottom of this page).
In this issue of Hydrocarbon Engineering, we have our own expert insight into what lies in store for the sector in the year ahead, courtesy of Alan Gelder, Vice President of Refining, Chemicals and Oil Markets at Wood Mackenzie. Turn to page 10 for Alan’s reflections on developments throughout 2023, as well as Wood Mackenzie’s outlook for the refining, petrochemicals and oil market in 2024.
- CHRONIS, A., HARDIN, K. and MITTAL, A., ‘2024 Oil and Gas Industry Outlook’ Deloitte, https://www2.deloitte.com/us/en/insights/industry/oil-and-gas/oil-and-gas-industry-outlook.html
