Petrochemicals become a “greener” investment than oil and gas
Sergey Suverov | Apr 14, 2021 19:41
The oil & gas industry is experiencing its third price slump in 12 years. It weathered its first two crises well, however this time is different – we are seeing supply chain disruptions alongside an unprecedented fall in demand amid the Covid-19 pandemic. This latest crisis has been exacerbated further by the ‘deep freeze’ in Texas, America’s key oil region, which led to short-term disruptions in key production and logistics chains.
The financial and structural health of the sector today is much worse than it was in the two previous crises. The rise of shale oil, supply glut and ‘generous’ financial markets that overlook the unsustainable, capital-intensive projects of oil and gas companies have all contributed to low returns. Today, with oil prices at a 30-year low and the pandemic accelerating existing trends, change is inevitable. In this context, the petrochemical industry looks increasingly promising.
The petrochemical industry is one of the fastest growing industries in the world – its growth rate exceeds that of global GDP. The industry is also flexible enough to respond to changes in the market environment. For example, while the pandemic drove down demand for petrochemical products from construction, manufacturing and textile industries, it stimulated a significant surge in demand for plastics used in medicine, hygiene and food packaging. In the coming years, regardless of the pandemic, the demand for petrochemical products will increase as the global population grows, particularly in fast-developing Asian economies with a growing middle-class, like India and China.
According to experts at noted that given the current macroeconomic environment SIBUR is well-positioned for tap equity capital markets. SIBUR’s IPO has been rumoured for a while now, and if the company does decide to go public, the transaction could become one of the most prominent of its kind on the capital markets.
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