The oil and gas price index for the first week of January offers a glimpse into a dynamic and unpredictable market in 2024. While the overall picture suggests relative stability, several factors, including economic performance, geopolitical developments, and production policies, will continue to influence price fluctuations throughout the year.
Energy
Starting this year, major development banks like the World Bank, ADB, and Inter-American Development Bank Group are significantly increasing funding for climate projects in Asia-Pacific and Latin America. This includes support for innovative climate technologies, renewable energy, and measures such as creating regulatory frameworks for private investment, temporarily halting debt repayment during climate disasters, and establishing common reporting approaches.
The move addresses growing pressure for climate financing, with ADB and IDB Group announcing significant investments in renewable energy. The World Bank Group has raised its climate target, allocating 45% of annual financing, providing an extra $9 billion for green initiatives. MDBs, including ADB and IDB, pledge to pause debt repayment during climate disasters, emphasizing a collective commitment to a green transition.
Asia is projected to be the driving force behind global oil demand growth in 2024, with South Asia, particularly India, outpacing China due to its robust economic expansion, while China’s appetite for the fossil fuel is expected to be dampened by economic headwinds. This shift marks a potential turning point, with India poised to become the key driver of oil demand growth in the coming decades. The Asian market will also be closely watching the continued flow of Russian crude and the potential return of Venezuelan oil following the lifting of sanctions.
Steel and Metals
A 20–30 million tonne jump in global steel demand is predicted for 2024, signaling a resurgence for the industry. Southeast Asia, Turkey, Europe, the US, and Brazil are leading the charge, buoyed by infrastructure projects and manufacturing growth. Although China’s demand might ease slightly, steelmakers will still see healthy margins thanks to higher product prices and lower material costs. This upswing promises a boost for economies worldwide, with increased investment and job creation in construction, manufacturing, and infrastructure sectors. While challenges like the US-China trade war remain, the overall outlook for the global steel industry is optimistic, indicating a thriving future fueled by a diverse range of markets.
Marine and Shipbuilding
South Korean giant Samsung Heavy Industries (SHI) has decided to suspend work on Russian Arctic LNG carriers, despite already facing challenges in meeting its 2023 order targets and experiencing a slowdown in the shipbuilding industry. This unexpected move, aligning with broader sanctions against Russia, poses potential financial risks for SHI. The company, which was constructing hull blocks for the Russian project in collaboration with the Zvezda shipbuilding complex, may face further financial implications given its previous struggles to fulfill 2023 orders. Daewoo Shipbuilding and Marine Engineering’s withdrawal from Russian contracts due to payment issues adds to the uncertainty surrounding SHI’s decision, reflecting both principled opposition to the war and pragmatic concerns about possible payment complications.
Petrochemicals
Asia is poised to dominate the global phenol industry, claiming a staggering 89% of new capacity by 2027 fueled by rapid industrialization and urbanization. Driven by major projects like Reliance’s 1 million tpy plant in India and Zhejiang’s 0.4 million tpy expansion in China, the region will add 2.48 million tonnes of phenol production capacity through new builds, shaping the future of this crucial chemical for plastics, pharmaceuticals, and more.
Power Generation
In a significant move towards cleaner energy, the Philippines has unveiled Terra Solar, aiming to be the world’s largest solar project upon completion. Stretching across 3,500 hectares in Nueva Ecija and Bulacan provinces, just north of Manila, this ambitious initiative includes 3,400 megawatts of solar panels and 4,000 megawatt-hour batteries, backed by a substantial investment of P200 billion. Once finished, Terra Solar seeks to make a significant contribution to powering the Philippines, accounting for 5% of the national grid’s capacity and fulfilling 12% of the overall demand. Surpassing other sizable solar parks like India’s Bhadla and China’s Golmud, this project outpaces the combined capacity of all existing solar projects in the Philippines. MGen Renewable Energy’s recent P15.9 billion investment in SP New Energy Corporation (SPNEC), the project’s proponent, supports this shift towards clean energy, marking a noteworthy accomplishment in the Southeast Asian country’s renewable energy objectives.
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