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Financial Reports &
Governance Other Information HENGYUAN REFINING COMPANY BERHAD l ANNUAL REPORT 2023 31

According to the International Energy Agency (IEA), world The continued financial strength of the industry is likely to raise
oil demand is expected to rise faster than expected next year, expectations of investors, regulators, and other stakeholders,
with world consumption forecasted to rise by 1.1 mbpd in who may anticipate further progress in emissions reduction,
2024, buoyed by improvements in the outlook for the United augmented investments in low-carbon energies, and amplified
States and barring further deterioration in the macroeconomic returns for shareholders. These expectations may serve as a
environment. The global upstream industry, for example, driving force, spurring companies to focus even further on
is projected to maintain its 2023 hydrocarbon investment both emission reduction and economic performance.
level of about USD580 billion (an increase of 11% year over year)
and generate over USD800 billion in free cash flows in 2024.

INDUSTRY OUTLOOK

(Based on the report from Deloitte, ‘Potential disruptors in the oil The 2024 oil and gas industry outlook is shaped by five trends
and gas industry’): and industry drivers that are expected to play an important role
in shaping the strategies and priorities of oil and gas companies
in the upcoming year:

GEOPOLITICAL UNCERTAINTY Energy Transition
• Evolving situations in Eastern Europe Prudently allocating
and the Middle East capital and
• Changing patterns of global trade effectively executing
clean energy policies

Critical Minerals
EMERGENCE OF NEW TECHNOLOGY Participating in the energy
• Majority of clean energy technologies transition by securing
remain under development a position in the supply
• Securing supply chain is imperative chain to tackle perceived
for upcoming technologies end-market risks

Global Energy Trade
Embracing the
MACROECONOMIC ENVIRONMENT growing dynamism
• High inflation is increasing material in energy trade and
and technical costs relationships
• Rising interest rate is driving 10-year
treasury yields (in the United States)
to their highest levels since 2007
Technology Adoption
Harnessing the
power of generative AI
Policy and regulatory initiatives:
• Net zero emission by 2050 targeted for innovative solutions
by 106 nations and new value creation
• Governments worldwide allocated
USD1.34 trillion in clean energy
since 2020 Downstream Industry
• Nearly 200 parties reached historic Revamping the
agreement during COP28 to transition refining industry in
away from fossil fuels, triple renewable alignment with evolving
energy and increase climate finance demand patterns
for the most vulnerable