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The year 2020 will be remembered as a difficult year for most of the global population, businesses, and especially the oil and gas sector. Due to the coronavirus pandemic, the drop in fuel demand and the war between Saudi Arabia and Russia over the commodity supply are the main factors responsible for the drop in prices and minimal investments in the oil exploration and production segment worldwide.
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An analysis conducted by Rystad Energy states that companies’ Capex is expected to be the lowest in the last 13 years. The analysis takes into account a scenario of US$ 34 per barrel this year and US$ 44 per barrel next year.
The estimate is that investments in exploration and production may fall by up to US$ 100 billion this year, totaling around US$ 450 billion.
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However, if oil prices remain at the current range of US$ 25, global investments could drop to US$ 380 billion in 2020 and nearly US$ 300 billion in 2021. This outcome would represent the lowest values in the last 14 and 15 years, respectively.
Rystad Energy added that the estimated cost cuts would be achieved mainly by reduced activity in U.S. shale, delays in projects that had not yet reached the final investment decision (FID) stage, deferred exploration activity, and cost-cutting in the development and production of conventional assets.
