Other Factors Influencing Financial Performance 2023 Business Outlook 1. Petroleum Business 2023 Crude oil outlook: The global oil demand forecast is approximately 103 million barrels per day being approximate to the pre-COVID-19 demand level. Such demand forecast increases by about 2 million barrels per day from 101 million barrels per day in 2022 thanks to eases of COVID-19-related restrictions in several countries. China also eased the restrictions and reopened their country in early 2023, which is predicted to escalate oil demand significantly since China is the world’s largest net oil importer. Nevertheless, factors that need to be monitored in terms of impacts on oil demand include inflation issues arising across the world popping up recession concerns, the Russia-Ukraine conflict’s situations and sanctions of U.S. and European countries on Russia. Crude oil production in 2023 is seen to improve by around 2 million barrels per day to 103 million barrels per day balancing with the demand. Most of the production tends to be contributed by U.S. producers accounting for around 1.3 million barrels per day. Meanwhile, it is foreseen that such production will have a tight outlook as most U.S. producers focus on capturing profits, hence slowly accelerating production, while OPEC and allies agree to decrease their production by 2 million barrels per day every month until end 2023 to uphold the crude oil price being dimmed by recession concerns. Moreover, the U.S.’ crude oil inventory was at a low level due to SPR release in 2022 leading to supply insecurity in case some significantly supply disruptions occur. The aforementioned outlook entails Dubai crude oil price forecast at USD 85-95 per barrel slumping from the 2022 average price of USD 96 per barrel 2. Petrochemical Business 2023 Petrochemical outlook: Market demand is expected to grow by 1.5-2.0% in 2023, especially demand from China that will start to recover from the ease of COVID-19 control measures and various economic stimulus measures including government investment and incentives for enhanced domestic spending, along with Chinese government’s reopening policy being seen to benefit businesses in the service sector, mainly those related to tourism. In the meantime, the demand remains under pressure from various factors. One of the factors include inflation that is predicted to persist at a high level tending to limit consumer spending or motivate consumers to be more cautious on spending possibly resulting in declined end product demand in certain industries. Soaring production costs due to probably high crude oil and energy prices relating to the prevailing Russia-Ukraine conflict, along with sanctions imposed by the U.S. and European Union on Russia and the increase in financial costs from rising interest rates are prone to pressure the demand as well, even though the interest rate increase has decelerated. On the supply side, petrochemical products supply in AsiaPacific region is seen to rise continuously, particularly in China, Indonesia, Malaysia, and Thailand. This is partially due to postponed start-up plans from 2022; besides, demand for imported petrochemical products from China tends to decline continually because of policies to boost domestic production capacity. Such aspects may lead to an oversupply in the region and heighten market competition. Moreover, the industry also need to adapt itself for facing upcoming trade restrictions on climate change that many countries have to set targets to reduce emissions of carbon dioxide and other greenhouse gases from energy and industrial sectors. The U.S. and European Union will begin imposing restrictions on the import of high-emission products including petrochemical products and others in the production chain. This requires operators in the petrochemical industry to adjust their operations to comply with such requirements. 191 Management Discussion and Analysis (MD&A) IRPC PUBLIC COMPANY LIMITED
RkJQdWJsaXNoZXIy ODg4NTI=