The oil and gas industry is reckoning with the fact that a decline in transport fuel demand is imminent. Faced with an existential threat to their legacy business segments, some companies are pivoting towards petrochemicals in a bid to diversify away from an increasingly obsolete product.

Underpinning this pivot are four assumptions, which if misjudged could lead to overinvestment and/or underestimation of future costs. We have analysed industry reports and market forecasts to tease out these assumptions and challenge them.

Our research seeks to address the following questions:

1. Can petrochemical demand feasibly replace the projected decline in oil demand for road transport?
2. What strategic options are oil and gas companies pursuing in an attempt to break into the petrochemical market?
3. What are the potential risks and opportunities associated with this transition?
4. What recent examples can demonstrate the risks of investing on overly optimistic assumptions?

The note is expected to launch on 5^th December 2024.