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The giant oil companies incurred heavy losses due to the decline in the price of oil as a result of the outbreak of Corona in the world, and for this they are forced to limit their exploration and drilling activities, and to follow a policy of integration.
لندن: The Covid-19 epidemic and the drop in oil prices it caused, have resulted in heavy losses for the giant oil companies, which find themselves forced to reduce their exploration and exploration activities significantly.
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 by 70% in the United Kingdom and 30% 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%, 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 “Aramco” 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% 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 Heinz & Boone, the Texas law firm. 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 hopes on the future of oil,” explains Pjarn Schilderub, 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, and despite the changes that have been taken towards producing more environmentally friendly energies, the plans of the large corporations method show that the appetite for exploration still exists, but it is colliding with the recovery of 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, emerging exploration projects are emerging, such as in the Arctic Ocean, which is believed to contain 13% of the oil reserves and 30% 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 Trump government approved the mid-August project, which 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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