Offshore staff
WARWICK, UK – Current conditions could force the oil and gas industry to re-assess its long-term future, according to Warwick Business School.
Professor David Elmes, head of Warwick’s Global Energy Research Network, said: “The fact that oil prices have sunk to a level not seen since 2002 will set alarm bells ringing. It’s not just the price per barrel, it’s the wider challenges facing the industry.
“The battle to supply, whatever the price, is happening in a climate of both short-term and long-term decline in the demand for oil. We are starting to see how the coronavirus is reducing oil demand, but some industry forecasts were acknowledging a flattening off in long-term demand last year, before the pandemic began.
“All companies in the sector will be looking at how they can cut costs, shift their activities to the lowest cost field they can, trim investment, and thinking hard about what dividend they can pay.”
Elmes added that NOCs worldwide will be having tense discussions with their governments on how long low oil and gas prices can be tolerated. “That will be made more difficult by governments needing to pump money into their economies to address the slowdown caused by coronavirus.
“The European-based large, international companies have started to say they will become less focused on oil and gas over time. There will be intense discussions on what can they do to move faster.”
03/30/2020
