It’s the same story all over the world; the coronavirus pandemic has caused oil and gas operators to pull investment and cancel projects. There are many different ways to show how the fall in investment has affected companies, and Offshore Technology has taken a look at three different analyses.
Number and size of contracts
Earlier this week, a report by GlobalData showed how contracts were shrinking in size and decreasing in number. Between January and March 2020, the number of recorded contracts issued fell to 1,000 compared with 1,365 in the three months before.
Of these, 347 were in North America, with Europe following with 328.
More tellingly, the total value of contracts was only 27.6% of what it was in the three previous months. GlobalData analysts said operators have now slashed more than $85bn from their projected spending from the year as a result of the coronavirus pandemic
In monetary terms, this meant worldwide oil spending decreased by $35.4bn from the last quarter of 2019 to the first quarter of 2020. This is the number that will matter to struggling supply chain businesses.
Number of horizontal rigs
Many analysts have tipped US shale oil as being the worst hit market. The decrease in investment can be seen as the number of active projects begins to tail off.
More than half of all horizontal oil rigs that were operating in mid-March are now out of action, analysis by Rystad Energy has shown. Data from Baker Hughes showed 270 horizontal rigs operating last week, compared with 624 two months previously.
Horizontal gas rigs showed a similar decrease over a much longer period. The number operating now is less than half of those operating in June 2019.
Rystad Energy head of shale research Artem Abramov said: “The oil price crisis and the impact of Covid-19 have resulted in the most dramatic collapse of the US land rig market in history.”
Future projects in China
China was the first country affected by the pandemic, and although it was one of the first to begin recovery, GlobalData analysts report it will likely see some projects fall through.
The country has recently reported new clusters of virus cases in areas such as Wuhan, where it was first reported. As a result, the surrounding province of Hubei has seen investment levels decrease to among the lowest in China.
Oil and gas analyst John Paul Somavarapu said: “The Covid-19 outbreak is expected to have a significant impact on Chinese economic growth in 2020, as the pandemic and resulting lockdown has dampened economic activity in the country. The pandemic has brought economic growth to a standstill. But the road to recovery looks more promising from 2021, as China is taking a series of measures for revival.”