Oil exploration to no avail as demand collapses |

Oil exploration to no avail as demand collapses |
Oil exploration to no avail as demand collapses |
London – The Covid-19 epidemic, which hit demand for oil and caused its prices to drop, has forced giant oil companies to tighten their exploration belts, even if the discovery of new fields remains necessary for their existence.

And with the shift to more environmentally friendly energy that would greatly sip the long-term demand for black gold, the outlook for an entire sector is bleak.

“The exploration of oil has taken a heavy blow this year with the collapse of demand, prices and oil due to the global epidemic,” said analyst from “BVM” Stephen Brennock told France Press.

In the North Sea, exploration activities have declined 70 percent in the United Kingdom, and 30 percent in Norway, compared to plans that were planned before the crisis, according to a study by the “Westwood” Center on Energy published in late September.

The American “Exxon Mobil” company reduced by 30 percent, equivalent to at least $ 10 billion, its investments, especially in the field of oil exploration and exploration. The Italian “Eni”, the British “BP”, the Norwegian “Equinor” and Saudi Arabia “” have also reduced their activities.

Companies dealing with energy giants are also paying a high price, as is the French “CGG” group, which works in the field of analyzing subsoil resources, which expects this year a 40 percent decline in its turnover.

On the other side of the Atlantic, more than 30 exploration and production companies have been bankrupt in the United States since the start of the year, according to the Texas law firm Heinz and Boone. As the price of West Texas Intermediate crude has remained stuck at $ 40 a barrel for a long time, 150 other companies may join it by 2020, according to analysts’ estimates from Rystad Energy.

“The markets are no longer pinning their hopes on the future of oil,” said Biarn Schildrop, an analyst at SEEP, adding, “Without potential growth (in black gold exploration), what can the sector do? He answered the question, saying, “Focus on profitability with less spending.”

Rafaela Hine of GBC Energy is more optimistic. She expects that “outside the United States, where it takes longer, exploration programs will resume in all major supply areas and will approach pre-crisis levels in the next world.”

“In the past, we saw that massive spending cuts in the budgets of major companies did not really affect their future production, because the search for new fields is, to a lesser extent, a matter of survival,” she told France Press.

But combating climate warming changes the picture, as the British company “BP” and other companies consider that oil demand in the world has already reached its peak and will not stop its decline from now on.

According to Westwood, despite the changes that have been taken towards producing more environmentally friendly energies, the plans of the big companies’ method show that the appetite for exploration still exists, but it collides with the decline in crude prices.

Brent and West Texas Intermediate crude prices fell in an unprecedented way in March and April, and appear to be stuck at around $ 40 a barrel, which is too low to allow many of the players in the sector, especially Americans, to achieve a commensurate rate of return.

On the other hand, there are emerging exploration projects, such as in the Arctic Ocean, which is believed to contain 13 percent of the oil reserves and 30 percent of the undiscovered natural gas reserves in the world, a task that has become easier with the rapid retreat of the ice cover.

The Russian “Gazprom Neft” and the English-Irish “Shell” announced their alliance in July to explore and explore the Arctic Peninsula.

For its part, the Donald government approved a project, in mid-August, that opens the way for oil derivatives exploration in the largest natural reserve in the United States in Alaska.

The exploration project includes a coastal area of ​​about 70,000 square kilometers, equivalent to the size of Ireland, along the Arctic Ocean.

Hain believes that these projects “are not economically sustainable and the current crisis makes them more difficult to achieve,” although “political will can outweigh these considerations.”

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