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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Oil Industry Faces Looming Threat Of Involuntary Outages

After the forced suspension of drilling and well shut-ins, the global oil industry now faces another challenge: production outages resulting from delays in regular repairs caused by the supply-chain disruption courtesy of the coronavirus pandemic.

“When the virus and the quarantine measures have been eased and it is safe to get back to work, it doesn’t mean the same work can be done with the same intensity because the weather windows could be missed and that can push maintenance even to the next year,” says Rystad Energy’s VP of Oilfield Services, as quoted by Reuters.

Such delays could be risky for exploration and production companies, but it might be even riskier for oilfield service providers: for them, long delays in work mean long delays in vital revenues. These averaged $80 billion between 2015 and 3019, according to Rystad Energy.

The problems range from a lack of components that need to be replaced during maintenance shutdowns because of logistics disruptions caused by national lockdowns or capex reductions that make companies unwilling to spend on maintenance. 

There are health considerations, too.

“They don’t want either to invest the capital expenditure into the maintenance project or they don’t want to have as many contract workers on sites as the additional influx of workforce might compromise people who have to remain at the refinery as essential personnel,” an oil analyst from Genscape, Amanda Fairfax, told Reuters.

Some companies are trying to reduce the delays.

Swedish Lundin Energy, for instance, has moved summer maintenance at the Johan Sverdrup field to the third quarter of the year rather than leaving it for next year. Still, it is doubtful everyone has the space to juggle maintenance schedules.

The problem spans the whole industry, from upstream to downstream facilities. It is early yet to estimate the extent of the damage to be done, but it could end up being substantial for some companies.

By Irina Slav for Oilprice.com

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