Only a few, short months ago, one topic dominated the agenda in the oil industry: climate change. Oil majors had battled through the price collapse of 2014-16 and, with Brent crude averaging a comfortable $64 a barrel in 2019, all eyes were on how the huge companies would tackle the existential challenge of global warming. Under pressure from investors, Bernard Looney, BP’s new chief executive, unveiled bold ambitions to cut its emissions to “net zero” by 2050 and rivals scrambled to compete on their green credentials. Then the bottom fell out of the oil market. As the coronavirus pandemic started to hit demand, producers in the Opec cartel and allies led by Russia failed to agree a deal to pump less. Saudi Arabia, Opec’s biggest member, responded by increasing output and prices plunged. By the end of last month, as efforts to contain the virus led to sweeping economic shutdowns around the world, oil demand was down by a quarter and Brent crude had fallen to a mere $22 a barrel. The oil industry is back in survival mode and the agenda appears to have been rewritten. The most pressing questions for the majors now are about their immediate financial health — their dividends and spending plans. In fact, many believe that the case for investing in green energy has been enhanced. “At sub-$35 oil, average returns from oil and gas projects are in the realm of typical renewables projects,” Mr Rechsteiner said. “However, the latter have a much more attractive risk profile; it is more utility-like than commodity-like.”
Times 13th April 2020 read more »
Opec secures record global oil cuts deal under US pressure.
FT 13th April 2020 read more »