Have a Think: Is Big Oil at the End of Its Rope?

May 14, 2020

4 Responses to “Have a Think: Is Big Oil at the End of Its Rope?”

  1. Sir Charles Says:

    FT: BP chief sees risk of oil demand passing peak as pandemic hits

    BP’s new chief executive said the coronavirus hit to crude consumption was likely to endure beyond the pandemic — and may even have ushered in “peak oil” demand.

    Bernard Looney, who took the top job at the UK energy major in February, told the Financial Times that the Covid-19 crisis was only “adding to the challenges of oil in the years ahead”, as travel bans and lockdowns slash consumption by a third from pre-crisis levels of roughly 100m barrels a day.

    “It’s not going to make oil more in demand. It’s gotten more likely [oil will] be less in demand,” Mr Looney said, noting that use of technology that enables remote working, cutting the need for travel, could persist.

    “I don’t think we know how this is going to play out. I certainly don’t know,” he said. “Could it be peak oil? Possibly. Possibly. I would not write that off.”

    The oil industry is assessing how much of the slump in demand sparked by coronavirus may become permanent. BP said last year it expected consumption to grow over the next decade before plateauing in the 2030s.

    BP, which derives the bulk of its cash from oil, reported a 66 per cent drop in earnings in the first quarter and like other supermajors has been forced into cash conservation mode. It has issued billions of dollars in debt, cut spending and delayed project approvals to preserve dividend payouts, which analysts believe have become unsustainable.

    The company is facing its latest crisis just as Mr Looney seeks to overhaul its business model and longer-term strategy for a world that demands fossil fuel companies take more accountability for climate change.

    He said the pandemic had bolstered his “personal conviction” of the need to shift strategy. BP is expected to invest more in low-carbon energy and less in hydrocarbons as part of a new pledge to become a net zero emissions company by 2050.

    Mr Looney noted that as crude prices have plunged, renewable energy projects had been able to attract funding, suggesting the pandemic has weakened the investment case for oil.

    “It’s the model that is increasingly respected and admired by investors as being resilient and having a different risk profile,” he said.

  2. grindupbaker Says:

    “Mr Looney noted…..” Are you sure this wasn’t a statement by our Canadian Minister of Finance.

  3. redskylite Says:

    “While the world looked the other way, corporate giants abandoned coal”

    For this reason Scandinavian investors had targeted it – just as this week the world’s largest sovereign wealth fund, the Norwegian Government Pension Fund, dumped its stake in AGL and placed BHP “under observation” as part of its policy excluding companies dependant on thermal coal.

    A bigger hit to climate recalcitrants emerged from the oil and gas sector.


  4. rhymeswithgoalie Says:

    Some wag in the video comment section reported:
    “Oil prices are so low, that ExxonMobil had to fire several of the congressmen on its payroll”

    I bet.

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