Impact of Covid-19 on oil and gas pipeline sector in South America

GlobalData Energy 11 September 2020 (Last Updated September 11th, 2020 15:20)

The South American oil and gas pipelines sector has been impacted due to weak demand and low oil and gas prices as a result of COVID-19.

Impact of Covid-19 on oil and gas pipeline sector in South America

The South American oil and gas pipelines sector has been impacted due to weak demand and low oil and gas prices as a result of COVID-19. While worsening financial situation is resulting is delay of upcoming pipeline projects, measures to curb the spread of pandemic has impacted operations of existing pipelines,  says GlobalData, a leading data and analytics company.

One of the primary measures that a majority of pipeline operators  are adopting to contain the spread of the epidemic, is to halt or delay any avoidable current or upcoming projects. In April 2020, the Peruvian government ordered shutdown of the Norperuano pipeline system as a precautionary measure against the pandemic. Suspension of operations of this pipeline also led to temporary shutdown of the Bretana oil field, operated by PetroTal. For similar reasons, all retrofitting works to reactivate the Oleoducto Trasandino (OTASA) pipeline has also been  delayed..

Pipeline companies in the region are reducing capex or downsizing workforce in construction projects. Petroleo Brasileiro SA has cut its capex by almost a third and had reduced its  workforce involved in the construction of Rota 3 pipeline and Comperj gas processing project. Frontera Energy Corp, on the other hand, is adopting the strategy of reducing capex by nearly 68% for the year 2020.

Although pipeline companies are making enormous efforts to tide over the current situation, it might take longer to recoup, given the recurring nature of the pandemic and the scale of devastation on the oil and gas sector. Additionally, pipeline operators in the region would likely reassess their current bottom lines and strategies in an effort to manage any such circumstances occurring in the near or distant future.