Covid-19 pandemic curtails the investment wave in petrochemical industry

Prevailing uncertainties and economic slowdown due to the outbreak will prompt more such announcements

FIDs of PTTGC’s ethane cracker project in Belmont County and CP Chem project in Orange County, US, has been deferred.
FIDs of PTTGC’s ethane cracker project in Belmont County and CP Chem project in Orange County, US, has been deferred.

With the impact of Covid-19 outbreak globally and the downturn in oil and gas market prices, companies are announcing project delays. The US had the largest number of project delay announcements by mid-May, followed by China, and construction works at Shell Beaver County Complex and utility works at the Formosa St James Parish Complex were affected. Prevailing uncertainties and economic slowdown due to the outbreak will prompt more such announcements, says GlobalData.

Dayanand Kharade, oil and gas analyst at GlobalData, commented: “Investments that are in early stages of development and projects targeting final investment decisions (FIDs) in 2020 foresee postponement, as the current situation intensifies and uncertainty in market growth continues. Companies are expected to re-work on investment strategies for new projects, which could possibly defer their FID plans.”

FIDs of PTTGC’s ethane cracker project in Belmont County and CP Chem project in Orange County, US, has been deferred as companies are closely monitoring economic developments. These pre-FID projects are also at risk, amid oversupply concerns and oil price crash.  

Kharade concluded: “The impact of the Covid-19 crisis on the petrochemicals industry varies across value chain, with major end-use segments such as automotive and construction taking a hit. However, demand from packaging and medical applications are helping the industry stay afloat.” 

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