Outlook 2021 +
COVID-19 has not altered the challenges, but there is a clear shift in focus.
Market trends in theRefining, Petrochemicals and Energy segments
In many respects, 2020 was an unprecedented year. The outbreak of the pandemic in the first quarter and general social distancing led to the sharpest global decline in economic activity since World War II. As a consequence of mobility restrictions, demand for liquid fuels hit all-time lows, which had an instant impact on the crude oil market, pushing oil prices below production costs. The three largest oil producers (the US, OPEC and Russia) had no choice but to cooperate. The biggest ever production cuts (10 mbd) agreed between OPEC and Russia, combined with the US production decrease (of more than 3 mbd over a year) caused by the price slump, helped to adapt crude oil supply levels to demand for liquid fuels, which gradually started to recover as the mobility restrictions were eased. As refineries did not reduce their throughput capacities in response to the major decrease in demand, capacity utilisation rates fell to record lows, driving refining margins below production profitability thresholds.
The outbreak of the pandemic and its direct consequences triggered a dramatic shift in the economic, social and political agenda. Significant changes can be seen, for example, in the approach to climate protection, especially in terms of increased awareness and sense of responsibility for climate among businesses, regulators and consumers. A growing number of companies are announcing strategies to achieve carbon neutrality, embarking on carbon reduction programmes, or looking for sustainable ESG financing for green investment projects. On September 9th 2020, PKN ORLEN, as the first oil company in Central and Eastern Europe, made a declaration to become a net zero business by 2050.