Impacts of the current economic crisis on downstream investments in oil & gas industry

Recent high energy prices resulted in an increasing number of downstream projects, leading to shortage and bottlenecks in labour, equipment and commodities, delays in the downstream projects as well as increasing the costs of the projects.

The economic crisis causes many owners to consider the viability and timing of new investments. Instability in feedstock pricing makes it difficult for downstream businesses to make their business models work; therefore some projects are being scaled back or cancelled. A slowdown in investment is expected until prices recover, and/or costs and taxes also retreat. Those investors will be in the position to make use of the current – relatively cooled down – commodity and E&C market position, which will be able to see the rock bottom, and prepare for as well as start investments by reactivating their project teams at the right moment as well as have the needed financial funds.

János Schronk