213
it is a $7-trillion industry employing more than 2% of the workforce and therefore
very important for the US economy, but also because it enables the United States to
have a say in the global oil market along with Russia and Saudi Arabia. Many ideas
are being considered for bailing it out including an import tax or tariff on all foreign
oil imports to the US (Author’s interview with Chris Cook, September 12, 2020).
But this will not work since major crude oil exporters to the United States will shift
their exports to the bigger market of the Asia-Pacific region rather than pay the tax.
As for US oil production, the US shale oil industry will emerge leaner from the
pandemic, but with virtually no influence in the global oil market. It might manage
to muster 7–8 mbd with US crude oil imports projected to rise from 9 mbd in 2019
to 11–12 mbd in the next 2 years. Many of the US shale oil drillers have already
declared their bankruptcy. This situation is not conducive to investment in the US
downstream or upstream (Author’s interview with Dr. Mamdouh G. Salameh).
The outbreak of the Covid-19 pandemic has made gas exports from Central Asia
to the EU convenient. The EU has plans to channel pandemic recovery funds toward
producing higher volumes of both green hydrogen from renewable energy and blue
hydrogen from natural gas, yet the production of the former is still much more
costly than it is for the latter. The goal of the EU is to make a complete transition to
green hydrogen; however, it will still need natural gas and blue hydrogen for many
years to make the transition to green hydrogen less costly. To this end, the EU needs
Caspian gas. This is also the case with all countries that are politically sensitive to
energy costs. Owing to not only the current low natural gas prices but also the cancelation or interruption of numerous economically less advantageous projects, the
cost of constructing the pipeline has become even more convenient (www.atlanticcouncil.org 2020a, b, c, d, e, f, g, h, i).
As the Covid-19 pandemic will negatively impact energy investment across the
world, it is highly likely that TCP will not make any significant progress before the
world economically recovers from the adverse impacts of the pandemic. Hence, the
impacts of the pandemic on the investment in the TCGP should be closely monitored to make an estimate of when the EU can confidently begin making gas trade
agreements with Turkmenistan, supported by front-end engineering design, other
essential studies, and the required environmental permits. As soon as the Covid-19
pandemic is over and the market has recovered to the extent of consuming new supplies, new and cost-effective pipelines could be utilized to transport comparatively
inexpensive gas from Central Asia. This would significantly enable Europe to
recover after the pandemic when decisions will be shaped by environmental concerns, much more than they were prior to the pandemic (www.atlanticcouncil.org
2020a, b, c, d, e, f, g, h, i).
Information published by Deloitte states that among the companies that have
been filed for bankruptcy, almost 30 hold liabilities of at least $50 million. Rosehill,
for instance, owes $100 million to senior bondholders alone. High production figures often hide increasing levels of debt and simple breakeven deals. Since 2010,
$300 billion has been spent on fracking. Although this has brought millions of barrels of crude oil to the US market, only a third of the companies engaged in the
market can be breakeven at $35 per barrel. Regardless of Covid-19, it is hard to say
Covid-19 Pandemic and Energy Market
it is a $7-trillion industry employing more than 2% of the workforce and therefore
very important for the US economy, but also because it enables the United States to
have a say in the global oil market along with Russia and Saudi Arabia. Many ideas
are being considered for bailing it out including an import tax or tariff on all foreign
oil imports to the US (Author’s interview with Chris Cook, September 12, 2020).
But this will not work since major crude oil exporters to the United States will shift
their exports to the bigger market of the Asia-Pacific region rather than pay the tax.
As for US oil production, the US shale oil industry will emerge leaner from the
pandemic, but with virtually no influence in the global oil market. It might manage
to muster 7–8 mbd with US crude oil imports projected to rise from 9 mbd in 2019
to 11–12 mbd in the next 2 years. Many of the US shale oil drillers have already
declared their bankruptcy. This situation is not conducive to investment in the US
downstream or upstream (Author’s interview with Dr. Mamdouh G. Salameh).
The outbreak of the Covid-19 pandemic has made gas exports from Central Asia
to the EU convenient. The EU has plans to channel pandemic recovery funds toward
producing higher volumes of both green hydrogen from renewable energy and blue
hydrogen from natural gas, yet the production of the former is still much more
costly than it is for the latter. The goal of the EU is to make a complete transition to
green hydrogen; however, it will still need natural gas and blue hydrogen for many
years to make the transition to green hydrogen less costly. To this end, the EU needs
Caspian gas. This is also the case with all countries that are politically sensitive to
energy costs. Owing to not only the current low natural gas prices but also the cancelation or interruption of numerous economically less advantageous projects, the
cost of constructing the pipeline has become even more convenient (www.atlanticcouncil.org 2020a, b, c, d, e, f, g, h, i).
As the Covid-19 pandemic will negatively impact energy investment across the
world, it is highly likely that TCP will not make any significant progress before the
world economically recovers from the adverse impacts of the pandemic. Hence, the
impacts of the pandemic on the investment in the TCGP should be closely monitored to make an estimate of when the EU can confidently begin making gas trade
agreements with Turkmenistan, supported by front-end engineering design, other
essential studies, and the required environmental permits. As soon as the Covid-19
pandemic is over and the market has recovered to the extent of consuming new supplies, new and cost-effective pipelines could be utilized to transport comparatively
inexpensive gas from Central Asia. This would significantly enable Europe to
recover after the pandemic when decisions will be shaped by environmental concerns, much more than they were prior to the pandemic (www.atlanticcouncil.org
2020a, b, c, d, e, f, g, h, i).
Information published by Deloitte states that among the companies that have
been filed for bankruptcy, almost 30 hold liabilities of at least $50 million. Rosehill,
for instance, owes $100 million to senior bondholders alone. High production figures often hide increasing levels of debt and simple breakeven deals. Since 2010,
$300 billion has been spent on fracking. Although this has brought millions of barrels of crude oil to the US market, only a third of the companies engaged in the
market can be breakeven at $35 per barrel. Regardless of Covid-19, it is hard to say
Covid-19 Pandemic and Energy Market