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Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

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Big Oil Books One Of Worst Years On Record


Big Oil recorded one of its worst years in history because of the coronavirus pandemic that pushed their financial results deep into negative territory.

Earlier this week, BP reported a net loss of $5.7 billion for 2020, citing oil and gas price weaknesses and demand destruction by the pandemic.

Exxon, for its part, booked the biggest loss in its modern history, at $20 billion, including an impairment charge of $19.3 billion.

“The past year presented the most challenging market conditions Exxon Mobil has ever experienced,” Exxon’s chief executive Darren Woods said, as quoted by the Wall Street Journal.

Indeed, things must have been tough for the biggest U.S. oil companies—reports emerged earlier this week that Exxon had discussed a merger with peer Chevron. Meanwhile, everyone was cutting costs by shedding non-core assets and tightening capital spending plans.

The energy industry was among those hardest hit by the pandemic, along with real estate and financial services. However, unlike other industries, the oil and gas sector also faces growing pressure from regulators and shareholders to make bigger commitments to a lower-carbon future.

BP, for instance, has pledged to cut its oil and gas production by 40 percent by 2030, and Exxon just announced it would set up a Low Carbon Solutions unit to commercialize plans for more than 20 new carbon capture and sequestration (CCS) opportunities around the world. All Big Oil majors have made commitments, the European ones generally more ambitious than their U.S. peers.

“An unprecedented demand collapse has forced the hand of Big Oil to right-size their dividends and capital frames; meanwhile plans for energy transition have been accelerated,” said JP Morgan analyst Christyan Malek, as quoted by the Wall Street Journal.

On the flip side, demand for oil is beginning to improve, and some expect it to rebound to pre-pandemic levels before this year’s end thanks to mass vaccination and the consequent—albeit gradual—return to a semblance of pre-pandemic normal.

By Charles Kennedy for Oilprice.com


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  • Mamdouh Salameh on February 03 2021 said:
    The global oil industry suffered most among industries of the world as a result of the COVID-19 pandemic. Its revenue in 2020 is estimated to have plunged by $1.0 trillion to $1.47 trillion compared with $2.47 trillion in 2019. The projection for 2021 is $1.79 trillion.

    Still, the global industry’s loss pales into insignificance when compared to the loss of the Global economy. Global GDP was estimated in 2020 at $130 trillion based on purchasing power parity (PPP) compared with $142 trillion in 2019. This means that the pandemic cost the global economy $12 trillion.

    The good news, however, is that global oil demand and crude oil prices are now surging underpinned by improving fundamentals of the global oil market, excellent compliance by OPEC+ members with the agreed production cuts, a widening of global rollout vaccination and accelerating depletion of the global oil inventories in addition to growing demand for refined products in the United States and record-breaking crude oil imports by both China and India.

    Based on the above, Brent crude oil price is heading towards $60 a barrel in the first quarter of 2021 and is projected to rise further to $70-$80 in the third quarter and average $60-$65 in 2021. Moreover, Global oil demand is projected to recover to pre-pandemic level of 101 million barrels a day (mbd) by the middle of 2021.

    Against these developments, the financial situation of BIG OIL will soon start to improve significantly with the notion of greenwashing itself no more than a passing fad.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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