Many companies are taking precautions against the spread of the Covid-19 coronavirus pandemic. How will it change the offshore industry in 2020?
The World Health Organisation has declared the Covid-19 coronavirus outbreak a pandemic, and many companies are taking precautions against the impact and spread of the virus.
The virus has forced companies to slow or halt physical operations, impacting production in the upstream sector. Meanwhile, downstream operations are upgrading their systems and pushing to work more flexibly.
Offshore Technology examines the measures put in place and predicts the potential future impact of the Covid-19 coronavirus on the offshore industry.
1. Oil price crash
One important impact of the coronavirus outbreak on the downstream oil industry is that the price of crude oil has fallen significantly in a short time, taking billions off the stock prices of major oil and gas companies.
Covid-19 was first identified in China, where it caused an economic slowdown for the world’s largest energy consumer. The decrease in demand led to fears of over-supply for fuel and oil products, and a resulting fall in prices. The Organisation of the Petroleum Exporting Countries (OPEC) met to discuss this on Friday 6 March.
At their summit, OPEC countries agreed to cut another 1.5 million barrels per day from production. They then met with Russian representatives to propose it took 500,000 bpd of the cuts, but Russia did not agree. Talks continued as stock markets closed.
When Russia did not negotiate, OPEC countries decided to increase production until Russia relented. Talks continued while markets closed on Friday. When they reopened on Monday 9 March, most companies lost millions of pounds of value.