Brent crude oil price (USD/barrel) Source: EIA Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 0 10 20 30 40 50 60 70 80 90 100 110 120 REBOUND IN OIL AND GAS MARKETS Oil prices recovered steadily throughout 2021 to a seven-year high at above USD80 per barrel in the final quarter. The OPEC+ alliance had agreed to ease oil production cuts gradually from August 2021 to September 2022. However, oil demand recovered faster than the increase in oil supply, pushing the oil prices further upwards. Outlook and Opportunities World oil demand is continuing to recover. After lagging behind demand, OPEC+ phased production increases is expected to return the oil market to balance from 2022 onwards. Meanwhile, LNG demand and supply are expected to grow steadily, driven by the increase in demand from China and India, and with oncoming additional supply from US and Qatar. Rystad has forecasted that investment in oil and gas projects will rise by 4% to USD628 billion in 2022, with a 14% increase in upstream natural gas and LNG investments. Material Matters 2017 105 100 95 90 85 0 // Q1 Q2 Q3 Q4 2018 2019 2020 2021 2022 forecast world production world consumption 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 World liquid fuels production and consumption balance (million barrels per day) Source: EIA Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 0 10 20 30 40 Similarly, LNG prices have increased to a record high driven by strong fundamentals. LNG demand jumped on economic recovery plus a cold northern hemisphere winter followed by a hot summer, while supplies have been stymied by production issues. Power curbs and outages across China due to coal shortages have only exacerbated the demand competition between Asia and Europe. Implications to MISC • In 2021, MISC’s businesses have remained steady, underpinned by strong fundamentals and stable portfolio of existing long-term contracts. Amidst the uncertain environment during the year, the Group’s business segments focused on project execution and delivery alongside a selective approach in pursuit of new growth projects. • Going forward, the optimistic outlook for oil and gas augurs well for the Group’s growth agenda for its existing portfolio. For more details, please refer to the Offshore and Shipping sections on the next page. 100 200 300 400 500 0 2017 2016 2015 2018 2019 2020 2021 2022f 2023f Source: Woodmac Source: IHS Markit Global gross LNG imports (Mt) Global gas & LNG prices (USD/MMBtu) Asia Spot Henry Hub TTF Asset availability, utilisation and marketability Risks Crude oil dynamics, supply, demand and price Evolving LNG market STRATEGIC REVIEW OUR OPERATING ENVIRONMENT MISC Berhad 70 Integrated Annual Report 2021 MISC Berhad Integrated Annual Report 2021 71
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