The Arab Petroleum Investments Corporation (APICORP) issues its Annual Top Picks for Energy Investments in 2020
“Wait-and-see attitude” on geopolitical and economic issues loom over market and investors
DAMMAM, Kingdom of Saudi Arabia, February 4, 2020/ -- Assuming balanced markets and barring other geopolitical
events, Brent prices are expected to trade in the USD55-65 range;
“Wait-and-see attitude” on geopolitical and economic issues loom over
market and investors; Natural gas, system flexibility and carbon
capture, utilisation and storage (CCUS) solutions and service sector
require investment support to facilitate energy transitions
The Arab Petroleum Investments Corporation (APICORP) (www.APICORP.org), a multilateral development financial institution, issued the annual APICORP’s Chief Economist’s Top Picks 2020.
Despite a set of recent regional geo-political events as well as global
health concerns such as the coronavirus, which has impacted China and
prompted the Central Bank of China to inject $174 billion via reverse
repo operations to support the economy, APICORP remains confident of the estimated committed and planned energy investments in the MENA region
reaching USD1 trillion – as stated in APICORP’s MENA Annual Energy Investment Outlook 2019 (https://bit.ly/2OnY983)
“For once, oil prices could be the least volatile market signal, barring other unthinkable developments. Coronavirus will impact demand growth
in 2020 but we still do not know by how much, with early estimates
indicating a downward revision of 300,000 barrels per day to 2020 global liquids demand. Assuming certain other factors continue to balance
each other out, particularly post-Q2 2020, we expect Brent prices to
trade in the USD55-65 range,” Dr. Leila R Benali, the Chief Economist at APICORP noted.
The real cause for concern is the prevalent ‘attentisme’ (wait-and-see attitude) on various key geopolitical and monetary policies, which is
in turn affecting the market and investors’ mindsets. Market players are looking for clear signals on three ambiguous issues: macroeconomic
complacency, climate change (i.e. carbon pricing), and the tit-for-tat
retaliation between the United States and Iran.
“With regards to carbon pricing, the attentisme recently
translated into calls to divest away from hydrocarbons. But we have to
highlight the USD70 billion drop in investments as per our Gas Investment Outlook 2019-2023 (https://bit.ly/2vOWFNX) compared to the previous 2018 report,” she said.
Furthermore, as highlighted in APICORP’s November 2019 White Paper, “The Energy Transition: Reshaping Investments and Strategies,” (https://bit.ly/2ui8k7w) carbon pricing helps level the playing field for energy technologies
and provides finance stakeholders, particularly from the private sector, greater visibility.
“In the light of dwindling returns across investment assets, a
fascinating transformation is materialising in the relationship between
energy companies and investors that may shape what the energy company of the future (https://bit.ly/36VJ5Fe) looks like,” Dr. Benali said.
She went on to add that APICORP’s current and future research
encompasses three areas where investment support is particularly needed
to facilitate sustainable energy transitions, including the natural gas, system flexibility and carbon capture, utilisation and storage (CCUS) solutions and energy services, with a particular focus on value erosion and stranded assets.
The full report can be found here (https://bit.ly/2OrY3wf)
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