Coronavirus lowered oil below the floor, and this circumstance, in spite of previously accumulated safety cushion in the face of the national welfare Fund, Russian economy faces the biggest trouble. In just one day 21 APR futures zapadnotekhasskaya oil WTI for June fell by 43.4% up to the catastrophic level of $of 11.57 per barrel, while European Brent crude fell by 24.4% — breaking below the psychologically important level of $20 per barrel. The day before, may WTI crude for the first time in history left in a deep minus, and April 21, with difficulty pulled up to a mere $10 per barrel. The price of this order on the world market — a disaster for Russia, whose budget was nearly half filled by oil and gas exports. What will happen to the domestic economy further — depends on how long the depressed oil prices: a year, three, ten years? Whether mother Russia to hold out until the price rebound up to at least $ 40-50 per barrel?
Texas ready to kill well
recently, regulators of the main oil States of Texas, under the control of which is the local counterpart and discussed the possibility of reducing oil production to halt falling prices for “black gold”. The drop was to the coronavirus, but the viral pandemic has given it a special boost. If oil production in Texas will be limited, it will happen for the first time since the 1970-ies. Then, however, it was not shale oil, and now it plays the first violin — hence, in discussions about “screwing the oil tap” was attended by the heads of the main actors in shale oil production: Pioneer Natural Resources Co., Parsley Energy Inc., Marathon Oil Corp.
the April deal OPEC and Russia failed to halt the decline in oil prices. The British magazine The Economist reminds us: oil giants have agreed to reduce over the next two months — may and June — oil production to 9.7 million barrels a day, and then not to increase the growth of oil production within two years. But when the cars do not go, do not fly planes and a huge chunk of the world economy is not functioning because of a pandemic COVID-19, even such measures for the maintenance of the oil market do not help. So before trump trumpeted victory — say, I managed to convince Russia and Saudi Arabia to stop the oil war and to agree on production cuts, so now all is well! No, no, CNN stresses. The us shale oil industry, with its relatively high cost can not long endure the price of $20 per barrel or even less. She desperately needed to get the economy as quickly as possible started to recover, pushing oil prices up. But while a speedy recovery is not expected.
thanks to shale oil America 2018Isla first in the world in terms of oil production, surpassing Saudi Arabia and Russia. But the States are ready to give oil the crown back to Russia and the Saudis. Many of the American companies producing oil by splitting the shale reservoir, is experiencing financial difficulties — because for their expensive projects, they were forced to take large Bank loans. While oil prices were high, problems in that — because it was than to repay debts. And now many of them will have to shut down. Evaluation of the Norwegian analyst firm Rystad Energy, this year can file for bankruptcy 140 American oil companies, and in 2021 — 400. This will create enormous unemployment this year alone will lose about 240 000 jobs, analysts say Reuters news Agency.
When will revive the oil industry? When will a return to past oil prices in the 40-50-60 dollars per barrel?
Freeze everything and everyone
Experts are not threatened in their forecasts for a long period of time, say five or ten years: during such a period can happen for many unexpected-unexpectedly — coronavirus example, God forbid something like that… Analysts say only about the next few months, maximum a year. But say unhappy things.
a research note from investment Bank Goldman Sachs said: “We are dealing not only with the greatest economic shock of our time. Under the gun are the industries based on the extraction of hydrocarbons, for example oil.”
Verdict research team interviewed 358 representatives of the industry of oil production, refining and petrochemicals. 67% of respondents believe that the price depression in respect of oil will last from six months to a year and a half after the end of the pandemic. The remaining 33% suggesting that the decline in prices caused by COVID-19, will last a maximum of six months following the completion of the pandemic. But six months, a year and a half — since when? Where is the cherished point of reference that lies in the murky future?
While it’s easier to answer the question “what?” than the question “when?”. Is not only the decline of existing production, but also the freezing of projects under construction. For example, postponed indefinitely the continuation of the construction of such large pipelines, as Liberty Oil and Red Oak — the operator, Phillips 66. Company Energy Transfer Partners stopped almost all work on the construction of the pipeline Mariner East Pipeline in Pennsylvania. Have frozen their projects and other operator — Pembina Pipeline Corp., Harvest Midstream Co. etc.
This trend is observed not only in the United States. In Argentina stopped the auctions, which were intended to provide funding for the construction of the pipeline Wakamura—Buenos-ayRES. In Nigeria, frozen project Nigerian Gas Co. the construction of the pipeline to Obiafu—Obrikom—Aubin. Chinese oil giant Sinopec has reduced its capital spending for 2020 — this will affect primarily oil refineries, pipelines and warehouses of the company.
In General, reduce and close down anything and everything that we design, construct and partially even that is already functioning. In this context, it is understandable the reluctance of Gazprom to say anything about the future of the “Nord stream-2”. A future he probably will, but when?
the Oil industry is not worth saving?
recovery Prospects counterpart is complicated by the fact that the hydrocarbon industry is heavily dog-sick long before the arrival of the coronavirus. Of course, the pandemic has played a role: in the latest report of the Center for international environmental law (Center for International Environmental Law — CIEL) States that “the oil and gas industry is among the industries most affected by the current economic crisis: leading companies in the industry lost an average of 45% of its value since the beginning of 2020. This decline affected almost every aspect of the oil and gas industry, including petrochemical production, which in recent years has been the main driver for further growth of this industry.” The heaviest blow to the oil industry — bus stops, especially in the US, which consume a fifth of all gasoline on the planet.
However, the same report notes that even before the pandemic in the sector of oil, gas and petrochemical industries “was seen clear signs of systemic weakness.” This was reflected in the low stock quotations of companies in the industry, high level of their debt load, growing competition from alternative sources of energy, reducing the demand for plastic and poor prospects of the industry in light of future actions to prevent global warming”. In other words, the crisis of the sector during a pandemic, COVID-19 was only a continuation of long-term trends of a recession, says the CIEL President Carroll Muffet, “If we look at the last five years or more, we will see that oil and gas companies included in the Dow Jones lagged far behind the other corporations included in the Dow Jones.”
Oil in the world so much that you offer with a large overlap exceeds demand even under normal condition of the economy, not to mention crisis situations. “What to do with all this oil?” — asks a rhetorical question Jim Cramer, host of the popular TV show “Mad money” on CNBC. And the owners of oil storage answer: nowhere, nowhere! All storage facilities are filled to capacity, and trump even wants to stop oil imports (its oil — drown) and use the empty capacity of the strategic petroleum reserve for x��of anemia surplus of American oil companies.
And the worst for the oil industry — that this time it might not even save the taxpayers ‘ money (though, in Russia, of her rescue, most likely, guaranteed). At least in CIEL’s report calls for governments not to do this: “the Official decision-makers in the light of the pandemic COVID-19 and economic collapse, should not waste the limited resources available to them, for pulling the oil, gas and petrochemical companies out of debt”. Such assistance, the authors of the report, will delay, but not stop the unstoppable decline of hydrocarbon production and replace it with clean energy sources.
the Correctness of this view of the situation confirms the fact that even the oil companies and oil-producing countries led by Saudi Arabia went to alternative energy — preparing for a future without oil. Russia is not ready…
in this picture, dark enough for the oil industry and its apologists, you can add another touch: the oil, gas and petrochemical blamed for strengthening the destructive effect of the pandemic. How? Not directly, but quite real. Where there are many enterprises in this industry, people suffer from different serious diseases, for example, in Louisiana there is a district of St. John the Baptist, which is Packed with refineries and petrochemical plants; it is called “cancer of the kennel” because of the abundance of cancer cases. And there is the most unfavorable situation in terms COVID-19.
it is Therefore quite understandable dislike of the people to the oil industry. Love her only those she supersite feeds and who lives today.
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