BAKU, Azerbaijan, May 24
By Leman Zeynalova - Trend:
McKinsey and Co. estimates that global gas demand will peak in the late 2030s as electrification of heating and development of renewables may erode long-term demand, Trend reports with reference to the company.
This, combined with midterm volatility, could lead to further consolidation and to an industry operating on incremental economics, according to McKinsey and Co.
“Gas is the fastest growing fossil fuel, with robust demand driven by the energy transition (for example, the shifts away from coal, and from dispatchable backup to renewables). However, the total extent of greenhouse-gas emissions is still being calculated for some LNG value chains,” the company said in its report.
A broad restructuring of several upstream basins will likely occur, underpinned by the opportunity created by balance-sheet weaknesses, particularly in US onshore and other high-cost mature basins, according to McKinsey and Co.
“We could see the US onshore industry, which currently has more than 100 sizable companies, consolidate very significantly, with only large at-scale companies and smaller, truly nimble, and innovative players surviving. Broad-based consolidation could be led by “basin masters” to drive down unit costs by exploiting synergies. In the shale patch alone, we estimate that economies of skill and scale, coupled with new ways of working, could further reduce costs by up to $10/bbl, lowering shale’s breakeven point and improving supply resilience.”
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