Uncertainty in global oil and gas markets could stay for some time to come as spare capacity is very low while demand is still recovering, Shell Chief Executive Officer Ben van Beurden said.

“I do believe that we’re going to be facing quite a bit of uncertainty in markets for some time to come,” he told reporters.

“Spare capacity is running very, very low,” he said, adding that despite economic and COVID-19 challenges, global oil and gas demand is still recovering.

Global oil and gas prices have surged this year as Western sanctions on Russia kept supplies from one of the world’s top producers out of reach from most buyers.

At the same time, the world’s oil refining system is running flat out, van Beurden said, driving up refining margins and prices of gasoline and diesel.

Some companies, including Shell, have permanently shut or converted units while exports of Russia’s refined products are restricted because of sanctions, he added.

Also, “we have China who deliberately or for domestic reasons do not export”, van Beurden said.

In Europe, Russian pipeline gas supplies have fallen because of maintenance at Nord Stream 1, forcing European buyers to turn to liquefied natural gas (LNG) imports and sparking concerns about supplies ahead of peak demand this winter.

“I think it will be impossible to cover the entire pipeline gas capacity out of Russia with LNG,” van Beurden said.

“If we are not going to take significant measures, like for instance energy savings, maybe a certain degree of rationing, it will be problematic.”
Source: Reuters