The future of the oil sector faces the repercussions of the...

The future of the oil sector faces the repercussions of the...
The future of the oil sector faces the repercussions of the...

The future of the oil sector faces the repercussions of the pandemic and the clean energy transition plans

Monday – 18 Safar 1442 AH – October 05, 2020 AD Issue No. [

With the shift to more environmentally friendly energy, oil demand may decline in the long term (Reuters)


London: “Asharq Al-Awsat”

The “Covid 19” epidemic and the drop in oil prices that it caused, have resulted in heavy losses for the giant oil companies, which find themselves forced to limit their exploration and exploration activities significantly.
And with the shift to more environmentally friendly energy; Which would greatly flood the demand for black gold in the long run, the outlook for an entire sector is bleak.
“The exploration of oil has taken a heavy blow this year with the collapse of demand and oil prices due to the global epidemic,” said Stephen Brennock, analyst from BPM, according to the French Press Agency.
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.
And the US company, Exxon Mobil, reduced by 30 per cent; That is, 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.
The 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 per cent 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 beginning of the year, according to the Texas law firm Heinz & Bone. And if the price of “West Texas Intermediate crude” remains stuck at $ 40 a barrel for a long time, 150 other companies may join it by the end of 2020, according to estimates by analysts from “Rystad Energy”.
“The markets are no longer pinning their hopes on the future of oil,” says Pjarn Schildrup, an analyst at SEEP, according to the French Press Agency, adding: “Without potential growth (in black gold exploration), what can the sector do?” And he answered the question, saying: “Focus on profitability with less spending.”
Raphaela Hine of GBC Energy is more optimistic. She expects that “outside the United States, where things take 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 the huge spending cuts in the budgets of the big companies did not really affect their future production, because the search for new fields is, to a lesser extent, a matter of survival,” she emphasized.
But fighting climate warming is changing the picture. The British company “BP” and other companies are preparing that world oil demand has already reached its peak, and that it will not stop declining from now on.
According to “Westwood”, despite the changes that have been taken towards producing more environmentally friendly energies, the plans for the way of the big companies show that the appetite for exploration still exists, but it is clashing with the recovery of crude prices.
Brent and West Texas Intermediate crude oil prices fell in an unprecedented way in March and April, and appear to be stuck at about $ 40 a barrel, which is too low to allow many actors in the sector, especially Americans. Achieving 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 last 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 thousand 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 their realization more difficult”, although “political will may outweigh these considerations.”

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