COVID-19 REPORT 8TH EDITION

GLOBAL OUTBREAK OVERVIEW AND ITS IMPACT ON THE ENERGY SECTOR

29 APRIL 2020

PUBLIC VERSION

Executive summaryOutbreak status and outlookImpact on oil demandImpact on the oil and gas industry

Table of Contents

2

Executive summaryHerd immunity unlikely as storage woes threaten global oil outlook

In this week’s edition, we have taken a closer look at true fatality rates in various countries versus reported fatality rates from Covid-19. Based on research from the New York Times, figures from 11 regions indicate that the true number of Covid-19 fatalities could be 60% higher than reported figures.

Applying this to our model shows that New York City will probably achieve herd immunity soon, as half of the population is likely already infected. For most other countries, a maximum of 13% of the population is likely infected, while in most places less than 1% is likely infected. Thus, there is no indication that global herd immunity will be achieved over the next 12 months. This means the operant strategy going forward will be the continued isolation of recovered regions, while local activities within a region slowly resume. We therefore must continue to wait for a vaccination, a new miracle drug, or an efficient anti-virus technology, which will hopefully arrive quicker than herd immunity.

Recent traffic data confirms that flight and car traffic reached a floor one or two weeks ago and are now slowly trending upwards. However, with 28 million barrels per day in demand destruction and still less than 2 million barrels of supply shut-ins, we are approaching a storage crisis where all available storage will be filled and the global oil market will “hit the wall”, as WTI did last week. Global sanctioning of new oil field developments in 2020 will probably be at the lowest level seen since the 1950’s, unless governments are successful at incentivizing companies to sanction new projects.

NYC herd immunity analysis, page 8

US fuel demand analysis, page 22

Global oil demand outlook, page 16

3

Executive summaryOutbreak status and outlook

• Global overview• Key country focus

Impact on oil demandImpact on the oil and gas industry

Table of Contents

4

Global overviewThe true number of people infected globally today is likely 54 million

Number of true and reported casesCases (log scale)

Source: Rystad Energy Covid-19 research and analysis; Worldometer

1

10

100

1,000

10,000

100,000

1,000,000

10,000,000

100,000,000 Estimated true cases

Fatalities

As of 27 April, 54 million people have likely been infected with Covid-19, according to our updated model.

Reported cases were alomst 3 million as of 27 April, a number which our analysis suggests represents just 5% to 6% of true cases. Reported cases are now growing at around 3% per day (7-day trailing average), down from 4% last week and 5% the preceding week. This is an indication that quarantine measures are working. Growth is no longer exponential, but now appears linear, with 80,000 new reported cases per day on average over the last three weeks

Registered fatalities globally were 207,000 as of 27 April, a number which grew by 3% over the last week versus the 5%, 6% and 10% growth seen respectively over the previous three weeks (trailing seven-day average).

In this edition we present one scenario, wherein current strict measures are maintained in the forecast period to end of May. In this scenario, 74 million people will be infected across the globe by the end of May.

Week 18Week 17

Forecast

5

Global overview Most European countries have past the (first) peak

6

0.0001

0.001

0.01

0.1

1

10

30-Jan-20 13-Feb-20 27-Feb-20 12-Mar-20 26-Mar-20 9-Apr-20 23-Apr-20 7-May-20 21-May-20

AfricaNorth AmericaSouth AmericaAsiaAustraliaEuropeMiddle EastRussia

Historical Future

This plot shows the date and level of peak daily fatalities. As seen, most European countries have passed the peak, while, for example, the peak is yet to come for Mexico and Peru .

Normal death rates are 1.0 to 2.5 per day per 100,000 people. Thus, Covid-19 deaths at this level means a doubling of the death rate, which is significant.

These figures are based on trends in reported fatalities so far, and do not take into account the underreporting of fatalities (see the next page) or a potential comeback of the virus after quarantine measures are loosened.

ItalySpain France

Germany

UK

China

India

USA

New York City

Mexico

Canada

Indonesia

Number of new reported covid-19 fatalities per day Per 100 000 people for 14 days rolling average

Date of peak daily fatalities (14 day average)

South Korea

Taiwan

Malay.

Brazil

Russia

Turkey

Size = Population

Peru

Sweden

Netherlands

Poland

Norway

Switzerland

Denm.Austria

Belgium

Normal death rates

Global overviewTrue number of Covid-19 deaths probably 60% above reported in selected regions

Number of fatalities per day per 100 000 population in March- mid April 2020*

The global population is growing, as there are 2.1 deaths and 5.3 births per day per 100,000 in population. Regions with an aging population, such as Europe, see 2.5 deaths per day per 100,000 people. In young, growing populations like Jakarta, there is around 1 death per day per 100,000 people. Comparing actual reported deaths in March and April 2020 with 2019, the death rate is significantly higher in 2020. Even when including Covid-19 reported deaths, actual deaths figures are higher, indicating an underreporting of Covid-19 fatalities.The weighted average of fatalites for 11 regions is shows here. We find that it is likely that actual Covid-19 deaths are 60% higher than reported.In some countries, deaths at hospitals are primarily those registered as Covid-19 deaths, which does not account for those who have died at home or at nursing homes. This partly explains the underreporting.

Source: New York Times Update on Covid-19 as of April 27th. *Reporting time details, see here: https://www.nytimes.com/interactive/2020/04/21/world/coronavirus-missing-deaths.html?referringSource=articleShare; Country/regional health authorities. Rystad Energy Covid-19 model; Note, our core model has not yet been updated to include likely non-reported fatalities as shown above

2.8

2.6

2.5

2.5

2.5

2.5

2.2

1.8

1.5

1.2

0.9

0.8

0.5

0.4

0.5

0.6

1.1

0.3

4.4

0.2

0.1

0.0

3.8

3.7

3.0

3.3

3.5

4.1

2.7

7.3

1.9

2.1

1.4

Belgium

Netherlands

Sweden

England andWales

France

Spain

Switzerland

New York City

Istanbul

Ecuador

Jakarta

Normal Covid-19 reported Unexplained

7

13%

12%

6%

10%

7%

10%

4%

3%

3%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Belgium

Netherlands

Sweden

England and Wales

France

Spain

Switzerland

NYC

Istanbul

Ecuador

Jakarta

Global overviewHerd immunity to be achieved in New York soon, but not in most other regions

Share of population infected as of 28 April 2020

Based on the true number of fatalities, as presented on the previous page, our modelis able to estimate the true number of infected people.This can be calculated as the number of true fatalities divided by the fatality rate, multuplied by growth over last 18 days. E.g. for Belgium it is 13%. For New York City, with a shocking 16,936 deaths,we have used a theoretical Infection Fatality Rate (IFR) of 0.58 and a growth rate of 3% per day. Given these parameters, the actual number of infected people per day is likely almost 55% of the population. However, IFR is probably higher in NYC due to the insufficient intensive care capacity, meaning that the total figures for infected people will be lower. Still, NYC is close to achieving herd immunity.The same may be true for Ecuador, although other regions are still far away from achieving herd immunity.

Source: Rystad Energy Covid-19 model; For Belgium: 63 deaths per 100 000 28 april; True deaths: 1/0.8*63 = 79; IFR: 0.8%; Infected 18 days ago: 79/0.8%=9875; Growth: 1.5% per day=1.32 for 18 days. Current number fo infected = 9875 * 1.32 = 13 035 = 13% of 100 000.

>40%

>40%

8

100

1,000

10,000

100,000

1,000,000

0 7 14 21 28 35 42 49 56 63 70 77 84 91 98

China

UK

Key country focusItaly, Spain, France flat curves - UK, US and Japan almost there – Brazil slowing down

Number of reported cases, key countriesCases (log scale)

Source: Rystad Energy Covid-19 research and analysis; Worldometer

Iran

South KoreaJapan – finally deviating from path of doubling every 8 days

For further details please see our

Covid-19 dashboard at rystadenergy.com.

Brazil

9

-

200

400

600

800

1,000

1,200

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

01-M

ar03

-Mar

05-M

ar07

-Mar

09-M

ar11

-Mar

13-M

ar15

-Mar

17-M

ar19

-Mar

21-M

ar23

-Mar

25-M

ar27

-Mar

29-M

ar31

-Mar

02-A

pr04

-Apr

06-A

pr08

-Apr

10-A

pr12

-Apr

14-A

pr16

-Apr

18-A

pr20

-Apr

22-A

pr24

-Apr

26-A

pr

Reported new casesReported new deaths (RHS)

Key country focus UK has likely peaked in active cases after more than a month of lockdown

*Assumes current measures remain in place during forecasting interval Source: Rystad Energy research and analysis; Worldometer

Daily new cases and deaths

For further details please see our

Covid-19 dashboard at rystadenergy.com.

United Kingdom, estimated total and active true casesNumber of cases; Current measures scenario*

Reported cases 152,840 0500,000

1,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,0005,000,000

01-M

ar04

-Mar

07-M

ar10

-Mar

13-M

ar16

-Mar

19-M

ar22

-Mar

25-M

ar28

-Mar

31-M

ar03

-Apr

06-A

pr09

-Apr

12-A

pr15

-Apr

18-A

pr21

-Apr

24-A

pr27

-Apr

30-A

pr03

-May

06-M

ay09

-May

12-M

ay15

-May

18-M

ay21

-May

24-M

ay27

-May

30-M

ay

Forecast

Active true casesestimated to have peaked

Total true cases may pass 4.5 million by end of MayTotal true cases today

likely around 4 million

New cases stabilized

New fatalities trending down

Strong measures implemented

10

Executive summaryOutbreak status and outlookImpact on oil demand

• Global overview• Aviation and jet fuels• Ground transportation and road fuels

Impact on the oil and gas industry

Table of Contents

11

Global overviewDemand bottoms out at 71.8 million bpd in April, will rebound to 98.9 million bpd in 2021

Global oil demand impact analysis Covid-19, levels and changes vs. pre-virus estimates

Remaining barrelsWe see a V-shaped route in oil demand, reaching a low point in April 2020 and with significant downside risks remaining into 2021.Average demand for 2020 is expected at 88.8 million bpd, a drop of 10.8% from 2019.Europe is the worst hit, with demand down 33.5% year-over-year in April, and on track for a 12.4% demand decline for 2020 as a whole.

Lost barrelsAbout 4 billon barrels will be removed from global oil demand during 2020.More than half of this decline comes from areas outside the main demand pools of East Asia, Europe and North America.In our downside scenario, we see global demand impact remains down by 10.5 million bpd in December 2020 and 4.8 million bpd in December 2021.

Source: Rystad Energy research and analysis

0

20,000

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100,000

0

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0

East Asia Europe North America Rest of World

2019 Pre-virus Mitigation Previous

12

Aviation and jet fuels Global aviation activity is stabilizing at 21,000 daily flights vs 100,000 flights a year ago

Number of departures the past 30 days (domestic and international combined)

Week-over-week growth in the past three weeks has progressed from -14% to -7% and is now set to stabilize at -2% growth.

Over 50% of global aviation activity is derived from North American departures. East Asia has 23% of global departures. Europe and the Rest of World have shown the largest number of cancellations, which is reflected by the low portion of total departures.

Source: Rystad Energy research and analysis

0

5000

10000

15000

20000

25000

30000

3500028

-Mar

29-M

ar30

-Mar

31-M

ar01

-Apr

02-A

pr03

-Apr

04-A

pr05

-Apr

06-A

pr07

-Apr

08-A

pr09

-Apr

10-A

pr11

-Apr

12-A

pr13

-Apr

14-A

pr15

-Apr

16-A

pr17

-Apr

18-A

pr19

-Apr

20-A

pr21

-Apr

22-A

pr23

-Apr

24-A

pr25

-Apr

26-A

pr

North America Rest of world Europe East Asia

13

(Average flights per day in April 2019 was close to 100,000 )

Ground transportation and road fuelsLooser measures in Europe have led to increasing traffic

Source: Rystad Energy Global City Traffic Database; TomTom Traffic Index; Google Maps; Rystad Energy research and analysis

Traffic levels for the last 7 days versus normalPercent difference, year-on-year, all days

Africa Americas Asia & Australia-90% -60% -30% 0% 30%

Guinea-BissauZambia

South AfricaEgypt

MadagascarTogo

MozambiqueGabon

TanzaniaEthiopia

Cote d'IvoireSierra Leone

SenegalAlgeriaGhanaBenin

MaliGambiaNamibia

NigerKenya

BurundiBurkina Faso

MoroccoCameroonMauritania

LibyaLesothoMalawiTunisiaLiberia

ZimbabweAngola

DR CongoCongo

BotswanaNigeria

MauritiusUgandaRwanda

Europe & Middle East

Rystad Energy Global City Traffic Database covers road traffic in 1,200+ cities

and 150+ countries

-90% -60% -30% 0%

UruguayNicaraguaArgentinaHonduras

ChileMexico

CanadaGuatemala

United StatesJamaica

BrazilGuinea

ParaguayVenezuela

Puerto RicoCosta Rica

EcuadorPanama

El SalvadorHaiti

BahamasDominican Republic

ColombiaPeru

Bolivia

-90% -60% -30% 0%

China, Hong Kong…Papua New Guinea

LaosMongolia

ChinaJapan

AzerbaijanAustraliaVietnamArmenia

CambodiaTajikistan

KazakhstanUzbekistan

IndonesiaMalaysiaThailand

KyrgyzstanIndia

New ZealandPakistan

SingaporeGeorgia

PhilippinesMyanmar

TurkmenistanSri Lanka

AfghanistanBangladesh

Current weekPrevious week

-90% -60% -30% 0% 30%

Czech RepublicLiechtenstein

DenmarkLatvia

BulgariaSwedenSlovakia

GermanyAustria

SloveniaIceland

HungaryLithuania

NetherlandsFinlandBelarusCroatiaPolandNorway

Bosnia and…Switzerland

Saudi ArabiaPalestine

EstoniaOman

UkraineQatar

TurkeyLuxembourg

BelgiumSpain

IranMoldova

MontenegroSan Marino

KuwaitPortugal

JordanUAE

RomaniaItaly

RussiaLebanonBahrain

SerbiaIsrael

GreeceUnited Kingdom

FranceAlbaniaIrelandCyprus

AndorraIraq

14

Global overviewRoad fuel demand in April is down 33%, jet fuel down 70%, all other fuels down 14%

Global oil demand impact analysis Covid-19, levels and changes vs. pre-virus estimates

Global demand for road fuel was 31.7 million bpd in April, jet fuel demand was 2.1 million bpd, and demand for all other fuels stood at 37.9 million bpd.

About 16.1 million bpd was removed from road fuel demand in April, while the decline was 5.2 million bpd for jet fuel and 7 million bpd for all other fuels.

Source: Rystad Energy research and analysis

0

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0

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0

Road fuels Jet fuels Other fuels

2019 Mitigation Previous

Pre-virus

15

Executive summaryOutbreak status and outlookImpact on oil demandImpact on the oil and gas industry

• Global market outlook• Market segment focus

Table of Contents

16

The oil market could run out of physical onshore crude storage capacity by the end of May if we assume that all remaining onshore storage capacity can be filled to the maximum.

However, in a more realistic scenario, where only 95% of capacity can be filled, the market could actually run out of onshore crude storage in early-May instead, barring additional production shut-ins on the upstream side.

The OPEC+ cuts due to commence on 1 May will not be large enough to prevent the market from hitting physical storage constraints, even when including floating storage crude stock builds of 2 million bpd each day in this model.

Taking into account practical constraints such as lack of accessibility to all market participants and other logistical issues, remaining crude storage capacity was only ~400 million barrels as of 10 April. Given the market oversupply since then, as of 21 April, the market may only have around 10 days left of practical onshore storage capacity for crude oil.

On 20 April, the WTI futures contract for May 2020 delivery defied gravity and settled for the first time in negative territory at minus $37.63 a barrel, signalling that the market is quickly realizing it is running out of practical storage capacity.

The bottleneck for refineries is motor gasoline, where remaining storage capacity is expected to run out around end-April.

Crude and condensate balancing scenario (Day 0 = 31 March 2020)Storage or capacity (Million barrels) Runs or crude supply (Million barrels per day)

30

40

50

60

70

80

90

-1000

-800

-600

-400

-200

0

200

400

Previrus

5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90

Remaining crude storage capacity (inversed)

Remaining crude storage 95% max utilization (inversed)

Remaining gasoline storage capacity

Remaining gasoline storage 95% max utilization

Floating storage (crude)

Crude runs (demand)

Crude supply (with required shut-ins to balance)

April 29th

Global market outlook Even with a “monster cut” by OPEC+ from 1 May, storage capacity will be filled in May

Source: Oil Market Weekly by Rystad Energy

Days0 = 31 March 2020

Practical onshore storage exhausted early-May?

17

Theoretical onshore storage exhausted end-May

Supply Segment Group

March forecast2020/2019

Current forecast2020/2019

Offshore deepwater - 2.4 % - 11.8 %Offshore shelf -7.9 % -16.7 %Oil sands -31.5 % -42.4 %Shale/Tight oil -27.6 % -41.6 %Other Onshore -16.7 % -18.5 %

Global market outlook Global investments by supply segment, Billion USD

Source: Rystad Energy UCube

0

100

200

300

400

500

600

700

800

900

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Offshore deepwater

Offshore shelf

Shale/tight oil

Oil sands

Other onshore

-25%

-24%

-24%

Pre-drop capex estimation

Forecast

18

243

17.1

15.3

12.58

4.86.5

179

0

50

100

150

200

250

2020 investmentsbefore oil crash

Majors NOC/INOC Shale-focused Globalindependent

Canada focused Others 2020 investmentsupdated

Global market outlook Global E&P announced capex revision, Billion USD

Source: Rystad Energy UCube, company reporting, Rystad Energy research and analysis

Announced CAPEX revision plans

* Logos represent only some of the companies, included in to peer group

19

0

100

200

300

400

500

600

700

800

1954 1956 1958 1960 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Other Onshore Oil Sands Shale/Tight oil Offshore shelf Offshore deepwater

Global market outlook Global new projects E&P investments by sanctioning year, Billion USD (real terms)

Source: Rystad Energy UCube

20

Global market outlook Even post corona, total revenues for the oil and gas service sector 2020 is $515 billion

21

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OIL MARKET WEEKLY – Demand report, a weekly report with:• An overview of global oil demand• Oil demand impact in two COVID-19 mitigation scenarios• Impact of oil demand in aviation, ground transportation and road fuels

OIL MARKET WEEKLY – Balances report:• A weekly Commentary with the latest oil market observations• A weekly Executive Summary on the oil market balances, oil supply and

demand, and the overall oil market view

OIL MARKET DASHBOARDS and Excel data on:• Oil demand analysis dashboard: split by country, transport type, aviation• COVID-19 dashboard: oil demand impacting two COVID-19 mitigation

scenarios

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