Mix and Match

10 June 2020

Factory closures, reductions in motor traffic, significant falls in the number of flights were among the effects of the Covid-19 pandemic, which contributed to a drop in the global demand for oil.

This drop left the global market oversupplied and storage facilities overwhelmed, leading to even negative prices for crude oil.

As the lockdown measures are easing in some parts of the world, there are signs that the demand for petroleum products is recovering, influencing a rise in prices. The price increase is also due to lower supply, as some oil producers shut down oil wells.

The International Energy Agency (IEA) in its Oil Market Report for May 2020 wrote: “We are seeing massive cuts in output from countries outside the OPEC+ agreement and faster than expected. This group, led by the United States and Canada, saw output in April 3mb/d (millions of barrels per day) lower than at the start of the year.

In June, that drop could reach 4 mb/d, with perhaps more to come." IEA’s outlook for the year does not look encouraging for the sector, as it expects demand to fall by 8.6mb/d.

This is a market that always has a long-term strategy, but if profitability of major players is affected, future investments could be impacted. This would be bad news for the crane and special transport industry, as the oil and gas sector (both onshore and offshore) is significant for their business. In this issue, you will find a feature on the transportation of offshore oil and gas components.

The global capacity of renewable sources grew considerably in recent years, but the transition to this newer sources is gradual. During my interview with Jacques Stoof, global director market development and innovation at Mammoet, he said that although the oil industry's share in electricity production will drop in the future, the demand for oil will not go away because more consumer goods (many of which use petroleum products) will be bought by the increased global population.

But will there be enough demand for lifting and transport for renewable sources to compensate for a potential fall in this sector?

If we look at this year, the answer is negative. In 2020, the IEA forecasts net additions of renewable electricity capacity to decline by 13% compared with 2019. "The decline reflects delays in construction activity due to supply chain disruption, lockdown measures and social distancing guidelines, and emerging financing challenges. This nevertheless corresponds to a 6% increase in global installed renewable power capacity," says IEA."In 2021, renewables are expected to show their resilience—the majority of the delayed projects are expected to come online, leading to a rebound in new installations."

The wind industry has definitely created many jobs for high capacity crawler cranes, in some cases even high capacity tower cranes. The special transport manufacturers have also seen increased sales for trailers they have especially designed for the industry. Hydro projects are not as frequent, but various types of cranes have been used for their construction. The solar industry is the one that demands the lowest capacity equipment, as the solar panels are much lighter and smaller in size than the components of other energy souces. In this issue's UK market feature, there is a case study of a compact crawler crane replacing a 6t transformer at a solar farm.

The crane industry has always worked closely with the energy sector, designing products to satisfy its lifting needs (some with capacities of thousands of tonnes). The energy sector repaid that with the creation of demand for those products. As we are transitioning to a new energy mix, it would be interesting to see how the relationship will evolve.

Sotiris Kanaris, Editor