Global number of coronavirus cases exceeds one million
The number of recorded coronavirus cases in the world has now exceeded one million, according to Johns Hopkins University.
So far, approximately 53,000 people have died from Covid-19 and over 210,000 have recovered from the virus. Europe accounts for half the number of cases.
According to the New York Times, roughly half the world’s population, or four billion people, is now under lockdown.
Exxon Mobil to advise on reusable medical masks
US oil and gas company Exxon Mobil has said it will help medical innovators with the construction of a reusable face mask for medical teams.
The mask would withstand sterilisation, while using disposable filter fabrics to stop the spread of coronavirus.
As the inventors of fabric filtration, Exxon Mobil said it is advising on the design and speeding up manufacturing. Once approved by US authorities, the company said it could produce up to 40,000 masks and filters per hour.
Global Center for Medical Innovation CEO Tiffany Wilson said: “Scaling solutions rapidly to address the global crisis requires significant investment, innovation and collaboration. By partnering with ExxonMobil, we’re harnessing the expertise and capabilities of one of the world’s largest energy companies to accelerate our ability to realize that vision.”
Government and Policy Updates from the New Statesman
In the UK
The government will write off £13.4bn of historic debt owed by hospital trusts to the NHS, Matt Hancock announced in a press conference last night. The health secretary, in his first public appearance since self-isolating with symptoms of Covid-19, also pledged £300m of government money to be made available for community pharmacies.The NHS has confirmed new temporary Nightingale hospitals in Bristol and Harrogate, which will add 1,500 beds. A 4,000-bed facility in London’s ExCel centre is due to open later today.
Hancock also outlined new measures which he claimed will deliver 100,000 tests a day in England before the end of April. These would include antigen tests that show whether people are currently infected, and antibody tests – which have not been clinically proven – to see if people have had Covid-19 and recovered.
Meanwhile, almost a million people have successfully claimed Universal Credit in the last two weeks – and the total number of applicants is likely to be much higher.
Around the world
United States: More than 6.65 million people in the US filed for unemployment benefits in the past week. Around 3.3 million people had filed for unemployment the previous week. The US remains
Germany: Despite evidence that widespread testing is behind the country’s low death rate, Germany has been told by its public health advisory body, the Robert Koch Institute, that its efforts must improve further. Germany’s 500,000 tests a week should increase that to more than a million, or 200,000 tests a day, the institute said.
China: A national day of mourning will take place tomorrow for the “martyrs” who died in the fight against coronavirus. The country will observe three minutes of silence at 10am on 4th April while air raid sirens and horns of cars, trains, and ships, “wail in grief”, the state news agency, Xinhua has reported.
Japan: Prime Minister Shinzo Abe is under pressure to declare a state of emergency after the country reported 235 new cases of coronavirus, bringing its total to 3,329. The capital, Tokyo, saw its largest single-day rise so far of 97 cases yesterday.
New Zealand: The minister of health, David Clark, has apologised after ignoring his government’s advice to exercise locally. Clark drove 2.3km from his home to go mountain biking yesterday. A member of the public recognised Clark’s van, which is decorated with a large picture of the minister’s face..
Read more on the New Statesman:
Nigeria enforces social distancing offshore
Nigeria’s Department of Petroleum Resources (DPR) has instructed oil and gas firms to practice social distancing at project sites. The measure is part of the government’s plans to stem the spread of the Covid-19 outbreak in the country.
Last month, DPR instructed oil and gas firms to reduce the workforce on offshore platforms. Travel offshore now requires a license, and rotations of less than 28 days are prohibited.
On 2 April, ten new confirmed cases of Covid-19 were recorded in Nigeria, with total confirmed cases count at 184 in the country. Authorities have reported two deaths from Covid-19 so far.
No, 5G does not cause coronavirus: 3 reasons why this theory is wrong and dangerous
It may sound bizarre, but this rumour has been circling for some time, and has been gaining considerable ground as the coronavirus outbreak spreads around the world.
The rumour suggests that the installation of 5G equipment causes health issues that are being attributed to the Covid-19 coronavirus.
Not only does 5G not cause the coronavirus, but encouraging theories that it does or might will result in more people dying.
Here’s some reasons why this theory is completely and utterly without merit.
Cybercriminals are using bots to feed coronavirus fears
The ongoing Covid-19 coronavirus pandemic has led to a surge in malicious bot activity online, according to research by cybersecurity software company Radware.
Bad bot traffic grew by 26% in February, with 58.1% of these bots able mimic human behaviour.
27.7% of traffic on media sites was from bad bots, as malicious actors look to scrape genuine content and republish it on their own sites that can then be used to dupe users into clicking on malicious links or falling for scams.
Could the coronavirus pandemic see drone deliveries take off?
It is now estimated that around 20% of the world’s population is in isolation, with 29 countries imposing a total or partial lockdown, as of March 26.
With many now only permitted to shop for food or medical supplies, and all non-essential retailers in locations such as the UK instructed to close until further notice, many are turning to e-commerce to buy goods.
As a result, there has been a renewed interest in the use of drone deliveries during and beyond the coronavirus crisis.
Drone deliveries have been promised for some time, but could the Covid-19 pandemic finally make them a reality?
UK records largest daily increase in Covid-19 deaths
The number of coronavirus deaths in the UK rose by 563 between 5pm on Monday and 5pm on Tuesday, bringing the total number to 2,352. This is the highest increase in the number of coronavirus-related deaths in a 24-hour period the country has experienced.
As of 9am this morning, 4,324 people tested positive since the previous day.
According to the Department of Health, there have now been 29,474 confirmed coronavirus cases in the UK out of the 152,979 people that have been tested.
Petrobras reduces production amid collapse in oil demand
Brazil’s state-owned oil operator Petrobras announced today that it will decrease oil production by a further 100,000 barrels per day, on top of last week’s cuts, in an attempt to “strengthen resilience” after the drop in demand during the Covid-19 pandemic.
“As of today, oil production will be cut by 200,000 barrels per day, a volume that includes the reduction announced on 03/26/2020,” the company’s statement says.
Petrobras will also ensure that “the duration of the constraint, as well as potential increases or decreases, will be continually evaluated.”
BP latest company to announce spending cuts
UK-based oil and gas giant BP has announced plans to make spending cuts to reinforce its finances. It is the latest in a long line of companies to do so.
It will reduce capital expenditure by 25%, down to $12bn. It will also cut $2.5bn from operating costs.
CEO Bernard Looney said the economic impact of coronavirus will affect BP’s first quarter results. However, planned business sales will still go ahead, and the company has assets to help it through.
He said: “This may be the most brutal environment for oil and gas businesses in decades, but I am confident that we will come through it – we know what to do and we have done so before.”
In the same statement, Looney spoke of the safety measures the company was taking to help its staff, and the ways it was helping those affected by the Covid-19 pandemic.
Yesterday, Polarcus also announced cuts to capital expenditure equal to $7m.
South Africa begins mass coronavirus screening
South Africa’s president Cyril Ramaphosa announced on Monday that the country will embark on a mass COVID-19 screening programme.
He announced that 10,000 workers would be visiting citizens’ homes in order to carry out screenings for coronavirus symptoms. Those who are found to have symptoms will be instructed to quarantine.
As of March 30, South Africa has 1,326 cases, with 3 deaths and 31 recoveries. The country is currently under a 21-day lockdown.
80% of scams, hacks and cyberattacks now coronavirus themed
According to cybersecurity firm Proofpoint, 80% of scams, hacks and cyberattacks are now coronavirus-themed.
Since the security firm began monitoring for coronavirus scams on 29 January, it has observed over 500,000 messages, 300,000 malicious URLs and 200,000 malicious attachments with coronavirus themes.
And as the virus has spread, the volume of coronavirus scams has exploded.
Why wasn’t the UK ready for Covid-19?
In the UK, a lethal pandemic was considered by the government a “level 5” threat – the most serious security risk. The only other level 5 threat has been large-scale biological or nuclear attack.
The coronavirus closely resembles the threat anticipated in government planning documents, and yet the government appears to have been unprepared. The UK lacks ventilators, personal protective equipment and testing kits, while emergency procedures for manufacturers and hospitals are being improvised on the fly.
In the New Statesman, Harry Lambert suggests that Britain may in fact have been prepared, just for the wrong outcome.
Saudi Arabia to further increase production
Saudi Arabia’s Ministry of Industry, Energy and Mineral Resources has said the country will further increase its oil production from May; the most recent measure in the coronavirus oil price war.
The ministry gave a brief statement saying the country will produce 10.6m barrels a day from May. This is a 600,000 barrel increase from current production levels.
In a statement, the ministry said: “This increase came as a result of displacing crude with natural gas from the Al-Fadhili gas plant, as a fuel for generating electricity, and from the decrease in local demand for petroleum products due to the decrease in transportation from the precautionary measures in place to limit the coronavirus outbreak.”
Oil and gas companies to improve well performance amid coronavirus
Three oil and gas operators, oilfield service company Churchill Drilling Tools, expendable tubular well specialist Mohawk Energy, and oilfield equipment firm Coretrax, have joined forces to work on a boundary-pushing approach to well lifecycle integrity and production optimisation.
Kenny Murray, CEO of Coretrax, said: “Given current industry challenges with the low oil price and Covid-19, it’s even more important that we support the sector with a continuous focus on reducing rig costs.
Integrating the impressive people and products from Churchill Drilling Tools and Mohawk Energy with Coretrax allows us to provide life-of-well solutions from drilling to decommissioning, directly targeted at production performance and integrity issues,” he adds.
Covid-19: Nigerian regulator asks for offshore workforce reduction
Nigeria’s Department of Petroleum Resources has instructed oil and gas firms to reduce the workforce on offshore platforms.
The measure is part of the government’s plans to contain the spread of the Covid-19 coronavirus in the country.
The restrictions come after the Nigerian Ports Authority (NPA) announced six workers on the Siem Marlin offshore rig were diagnosed with Covid-19 late last week, according to Reuters.
Read full article here.
How oil tanker rates have moved since the Covid-19 outbreak
As of mid-March, the rates for chartering very large crude carriers (VLCCs) have significantly increased on a weekly basis after the recent crash in crude oil prices.
The rates peaked approximately 450% higher when compared to March 2019 for the Middle East Gulf to the US Gulf routes. Tanker rates had initially declined in February amid subdued demand for crude oil and petroleum products, following the outbreak of Covid-19.
However, after Saudi Arabia and Russia spat over crude production cuts, which led to an oil price crash and, subsequently, the tanker rates shot up from 6 March as oil producers and traders started enquiring for VLCCs to hold crude oil temporarily and wait for price recovery.
In the second week of March, there was a distinct spike in rates for VLCCs, originating from the Middle East and heading towards the US Gulf and the China routes.
The practice of leasing VLCCs for hoarding crude oil during downturns is quite common. It allows producers and traders to recover their production or procurement costs and, sometimes, even profit from the trade if the price recovery is within a short span.
However, the present scenario is unprecedented because, on one hand, crude oil demand has dropped drastically worldwide as industries and transportation have come to a near standstill situation. On the other hand, Saudi Arabia is preparing to raise its output and push more crude oil cargoes to global refineries.
The current downturn may last for a longer duration or until Saudi Arabia and Russia come to an agreement over production cuts. It would be very challenging for oil producers and traders to estimate the suitable level of freight rates and the holding period for achieving breakeven.
Five ways the world will be changed by coronavirus
Coronavirus is probably the largest crisis of our generation. In the short term, quarantine protocols and fear of contagion has led to food shortages and panic buying, as well as the reduction of CO2 in the atmosphere.
The decisions made by politicians now may shape the rest of the 21st century in terms of culture, economics and policy.
From remote working and unemployment, to sustainability and mass surveillance, here are five ways the COVID-19 pandemic could impact the world.
Oil storage could fill “within two months” – analysts
Analysts at financial services company Cantor Fitzgerald Europe have said global oil storage may soon fill.
Oil and gas analyst Jack Allardyce said: “With major producers pumping barrels freely and the IEA suggesting that short-term demand could fall by a fifth due to travel restrictions, global storage is likely to hit capacity over the next two-to-three months.
“This is likely to be particularly damaging for US crude, with prices in the Permian region potentially hitting single digits. While we believe that current levels are unsustainable in the medium term given achievable breakeven prices, the ongoing uncertainty around COVID-19 and apparent stalemate between Riyadh and Moscow is likely to cause continued downward pressure over the coming weeks.”
Last week, newspaper The Guardian made similar predictions, saying oil prices could fall to below $10 per barrel.
Planning digital transformation during a pandemic
We are now entering a time of unpredictability and volatility for businesses, triggering the imagination when it comes to the impact of technology on private life, business and society.
In many cases, the coronavirus pandemic will bring into question how we use and engage with digital technologies, which have now become intimately entwined with business change.
To this extent ‘digital transformation’ has become a pleonasm and the next twelve months will be defined by businesses’ ability to survive in a time of uncertainty and a renewed quest for simplicity.
Simplicity is what is needed – in the form of simple messages, instant action, zero friction and a continuous stream of exciting and rewarding signature moments.
US overtakes China in number of COVID-19 cases
The US has overtaken China as the country with the most COVID-19 cases, as the number of confirmed cases reaches 86,000. The number of deaths in the US has reached 1,300.
US President Donald Trump has attributed this spike in cases to an increase in coronavirus testing. Despite this, the president has publicly said he hopes to have the country reopened by Easter Sunday.
22 states have now instructed residents to stay at home, only leaving to buy food or medical supplies. These measures are thought to affect 49% of the US population, according to Business Insider.
Infected worker airlifted from North Sea vessel
UK-based operator Hurricane Energy has confirmed a coronavirus medical evacuation from a vessel west of the Shetland Isles in the North Sea.
The emergency airlift flew to the Aoka Misu floating production, storage and offloading (FPSO) vessel on the Lancaster field.
The flight left Sumburgh on Wednesday night to bring the worker onshore and treat them. No further information is known at this time.
Yesterday, UK oil and gas trade body OGUK health and safety director Trevor Stapleton said he was aware of only one medical evacuation flight on the UK continental shelf in recent weeks. However, he told press the flight was not confirmed as being related to coronavirus.
Coronavirus cybersecurity: Ten tips for secure remote working
As the ongoing Covid-19 pandemic continues to affect numerous aspects of daily life, workers and employers are adapting to new ways of working.
Although social distancing and social isolation are key to slowing the spread of the virus, they have tested organisations’ infrastructure and remote working practices.
“Remote working on a scale we’ve never seen before has now become a fact of life; doing this without compromising security will be more important than ever,” says Jeremy Hendy, CEO at cybersecurity firm Skurio.
Here are ten key pieces of advice from experts from the cybersecurity industry to help organisations maintain robust security while remote working.
Equinor details $3bn coronavirus action plan
Norway’s state-owned operator Equinor has given details on its announced capital expenditure (capex) cuts.
Like Total and Chevron before it, Equinor will cut one-fifth of its capital expenditure. This its budget has fallen from $10bn-$11bn to $8.5bn. It has also reduced its exploration budget, from $1.4m to $1m.
Equinor will attempt to reduce operating costs by $700m across 2020. As part of this, drilling and completion projects onshore are being postponed.
CEO Eldar Sætre said: “Our strategy remains firm, and we are now taking actions to further strengthen our resilience in this situation with the spread of the corona virus and low commodity prices.”
The company said it can be cash-flow neutral with average oil prices of $25 per barrel for the rest of the year.
Ineos suspends shutdown of North Sea pipelines
Pipeline operator Ineos has suspended its planned summer shutdown of the Forties Pipeline System. It said planned engineering during the require gatherings of workers, which should be avoided during the ongoing coronavirus pandemic.
It has written to all customers, telling them the pipeline will not shut down on 16 June as planned. Instead, the shutdown will happen in August, at the earliest.
In a statement, Ineos said it was mindful of the benefits of the work being carried out, and the risks if it was not. However, it said customers “overwhelmingly” encouraged the postponement of work.
Aramco and Gulf Keystone make spending cuts
State-owned oil company Saudi Aramco will cut $25bn-$30bn from its capital expenditure in response to the coronavirus pandemic.
However, analysts have said this may affect its acquisition of Indian petrochemical company Bharat Petroleum Corporation Limited (BPCL).
Aramco also planned to gain a further 20% stake of Reliance Industries oil-to-chemicals business. It says the proposed dead is still being assessed.
The Saudi Arabian company originally planned to spend $35-40bn on capital expenditure. However, it has made cuts in response to volatile markets and the continuing coronavirus pandemic.
Yesterday, Gulf Keystone announced its plans to reduce capital expenditure, particularly on the Shaikan field in Iraq.
It estimates that, including spending to date this year, its 2020 capex will be $50m-$60m.
This will result in a decline in its planned production levels. The company was aiming to produce 55,000 barrels of oil per day, but will now suspend guidance “until such time as the outlook becomes clearer”.
Workers lack faith in energy companies’ resilience plans: Prospect survey
According to a survey carried out by UK trade union Prospect, key workers in the energy sector do not think their employers are carrying out adequate contingency plans to deal with the Covid-19 coronavirus pandemic.
Out of 1,000 responses, 48% are confident about the plans put in place to continue operations, with even lower figures among people working in electricity distribution networks.
Less than half of respondents believe that employers are enforcing appropriate safety measures such as reducing physical contact while 45% of them do not know if there shortage of personal protective equipment.
Chevron and Phillips 66 latest to make coronavirus spending cuts
Two US oil and gas giants, Chevron and Phillips 66, have joined others in announcing coronavirus spending cuts.
Chevron has announced it will cut one-fifth of its capital expenditure (capex), a sum of $4bn. Of this, half will be cut from “upstream unconventionals, primarily in the Permian Basin”.
The Permian Basin lies on the border between Texas and New Mexico, US; Chevron says it is the largest net acreage leaseholder there. The company has revised its annual production estimates for the area down by one-fifth.
The remaining $2bn of cuts take $800m from petrochemical and downstream business, $700m from exploration, and $500m from its upstream base business.
Chevron says it expects production to be flat compared to 2019 and aims to reduce operating costs by $1m as previously planned.
Phillips 66 announced its coronavirus spending cuts a few minutes after Chevron. It will reduce spending by $700m to $3.1bn across the year. It plans to cut $500m from operating costs and has taken a one-year $1bn loan for greater flexibility.
The Red Oak Pipeline and Sweeny Frac 4 projects are under construction but Phillips 66 says it will defer them. The company was due to make a final investment decision on the ACE Pipeline, though this has also been deferred. It is currently working with partners on the Liberty Pipeline, which it has also deferred.
In line with announcements by other energy companies yesterday, Chevron and Phillips 66 said planned share buybacks would not continue. Chevron spent $1.25bn repurchasing shares so far in 2020 but will now stop. Phillips will do the same, having spent $440m during the first quarter of 2020.
Covid-19 triggers 20% drop in oil demand
Early figures are suggesting that the outbreak of Covid-19 could have a significant impact on global oil demand, with Arij van Berkel, a director at US-based research firm Lux Research claiming that “early indications by traders suggest a 20% drop in demand.”
“In a sense, the current demand decrease is a preview of demand projections for 2030 and beyond,” he continued, noting that the outbreak could simply be accelerating a trend many have already predicted. “As an example, Barclays projects a global peak in oil demand between 2030 and 2035 followed by a steady demand reduction.
“We should watch how oil companies respond, as it will reveal vulnerabilities to decreasing demand and consistently low prices.”
UK Government announces closure of non-essential businesses
Last night, UK Prime Minister Boris Johnson announced more stringent, semi-lockdown measures for the UK to encourage social distancing.
These included only allowing people out of their homes to shop for basic necessities, exercise once a day, any medical appointments and to go to work if absolutely necessary.
To the end of discouraging people from leaving their houses for any other reasons, the UK Government closed all non-essential shops, including clothing and electronics retail stores, hair and beauty salons, and markets, except those selling food.
The police and other relevant authorities will be given powers to enforce these social distancing rules, including issuing out fines.
Global GDP may drop by 1% in 2020, says Goldman Sachs
Goldman Sachs expects global real gross domestic product to contract by about 1 per cent in 2020, a sharper economic decline than in the year following the 2008 global financial crisis.
“The coronacrisis or more precisely, the response to that crisis — represents a physical (as opposed to financial) constraint on economic activity that is unprecedented in postwar history,” the investment bank said in a note to its clients published late on Sunday according to India Today.
OKEA says Yme project will get first oil in 2020
Norwegian oil production firm OKEA has confirmed its Yme redevelopment project is scheduled to deliver first oil in the latter half of 2020. The project is located in the Egersund Basin, 100km off the coast in the Norwegian area of the North Sea.
OKEA is working with operator Repsol and the other joint venture partners to reduce the impact on the project caused by travel and other restrictions due to coronavirus pandemic.
However, OKEA will postpone all sanctioning decisions on Yme where partners agree. This may mean drilling or seismic programmes, where possible.
Its containment measures will result in around a 90% decrease of the company’s planned 2020 exploration expenditure.
Talos Energy announces budget reductions
US-based oil extractor Talos Energy today announced it will spend $170m less on capital and operating costs in 2020. This would be a one-third reduction in its annual capital expenditure. In a statement, the company said it would also seek further cost-cutting across the year.
Talos said it will be able to generate free cash flow in 2020 despite the low price of oil. After expenditures and interest payments, it said this would be “in the mid-$20s per barrel average WTI prices”.
The statements said the company would focus on its previous commitments and fixed-cost production from its current assets. It said: “Given the ability to utilize existing infrastructure, Talos believes these high margin, low breakeven investments are economic even in the current commodity price environment.”
The company said it had not changed spending for front end engineering and development work on the Zama project, offshore Mexico.
Talos has also re-evaluated its estimates for the year. It expects to sell 3,100 barrels of oil equivalent per day less then previously predicted, a fall of less than 5%.
President and CEO Timothy Duncan said: “I believe Talos is well positioned to successfully navigate the current environment. We expect to continue to invest in our infrastructure-led short-cycled developments while staying focused on moving Zama forward towards a final investment decision. We believe our 2020 updated capital program will be self-funded in the mid-$20’s per barrel of WTI.”
“These are not the only spending reduction and costs savings we expect in 2020. We also expect the costs associated with certain services to come down throughout the year, but we are not counting on or including such cost reductions in these assumptions.”
Total makes spending cuts due to low oil price
Oil and gas company Total has revealed plans to cut spending, costs and share buybacks throughout 2020.
CEO and chairman Patrick Pouyanné informed staff of the French company about spending changes on Thursday. Capital expenditure (capex) will fall by more than one-fifth, to less than $15bn. The company said the saving were mainly from short-cycle, flexible expenditure, which it could negotiate quickly.
It will cut $800m from 2019 operating costs, $500m more than was previously planned for 2020.
Total also planned to buy back more than $2bn-worth of shares over 2020. It has now suspended the buyback, having purchased $550m of shares.
Santos delays investment decisions and reduces spending
Oil and gas producer Santos has revealed plans to shore up its financial position during the coronavirus pandemic. It will reduce its 2020 capital expenditure (capex) and defer the final investment decision (FID) on its Barossa project.
The Australia-based producer said it would cut its full-year capital spending by $550m, about 38% of its planned budget. It will also cut another $50m from its production costs.
It has delayed the $7bn FID on the Barossa offshore development project, but not yet given a new timeline.
As part of the announced measures, Santos is aiming for free cash flow breakeven at an oil price of $25 a barrel.
Santos managing director and CEO Kevin Gallagher said: “We are confident in the business continuity and contingency plans that have been implemented and will continue to monitor and introduce additional measures in accordance with Australian Government health advice to protect our people and maintain operations.
Shell cuts spending for better financial stability
Royal Dutch Shell has announced it will reduce costs and spending to maintain financial stability during the coronavirus pandemic. The UK/Netherlands based company said it needed to be “well-positioned for the eventual economic recovery”.
It said it will reduce its capital expenditure for 2020 by $5bn, to $20bn or less. It originally planned to spend more than $25bn. Moreover, the company said it will also cut £3-4bn from the previous year’s operating costs.
In a statement, the company said: “Shell is still committed to its divestment programme of more than $10 billion of assets in 2019-20 but timing depends on market conditions.” Because of these delays, Shell will not buy back shares as planned.
Shell CEO Ben van Beurden said: “The combination of steeply falling oil demand and rapidly increasing supply may be unique, but Shell has weathered market volatility many times in the past.”
“In these very tough conditions, I am very proud of our staff and contractors across the world for maintaining their focus on safe and reliable operations while also ensuring their own health and welfare and that of their families, communities and our customers.”
UK Union urges government for new offshore strategy
UK-based offshore energy workers’ union RMT is urging the British government to devise a new offshore strategy to help the industry through the coronavirus pandemic. It says it needs help to prevent “catastrophic” job losses and skills shortages in UK offshore.
It says this would preserve the offshore oil and gas industry and jobs in the sector, especially in Scotland.
RMT General Secretary Mick Cash said: “We are hearing that exploration projects on the UK continental shelf are being delayed or cancelled as oil gas prices plummet to unsustainable levels. This is threatening to take some operators to the wall, along with the contractor and supply chain workers maintaining their assets.
“Norway’s state energy company Equinor has set up a department specifically to respond to COVID-19 with the overriding aim of preserving oil and gas production and the jobs it supports in the North Sea today.
OECD expects economic fallout to be felt ‘for a long time to come’
Speaking to CNBC, the OECD’s secretary general, Angel Gurria, stated: “What you have is an economic effect now that, very clearly, is going to be prolonged beyond the period of the pandemic.”
“We’ll hopefully get rid of the pandemic in the next two or three months and then the question is how many unemployed (will there be), how many small and medium-sized enterprises will be in a very, very severe situation if not disappeared by that time.”
“Life, and economic activity, is not going to be normalized any time soon,” he said. “We’re going to have the impact of this crisis for a long time to come.”
Egypt reduces energy prices for industrial users during Covid-19
Egypt is reducing energy prices for industrial users as part of measures to soften the economic impact of the coronavirus (Covid-19).
The country will lower the price of natural gas for industrial use to $4.50 per one million British thermal units (BTUs), the Egyptian Government said in a statement released on 17 March. It had previously been charging $5.50.
The government will also reduce the price of electricity to heavy industry to EGP0.10 ($0.0064) a kilowatt-hour, down from EGP1.10, and leave electricity prices for other industries stable for three to five years.
Egypt had been raising energy prices annually over the past few years, with the ultimate goal of removing all subsidies.
In July 2019, Egypt introduced a round of fuel subsidy cuts, raising domestic prices by between 16% and 30% to bring them into line with their real cost, as it nears the end of an International Monetary Fund (IMF)-backed economic reform programme.
Impact of Covid-19 on Egypt
The country has had 196 confirmed cases of Covid-19 and has announced that airline travel will be banned for two weeks from 19 March.
The economic impact of the virus on Egypt’s economy is expected to be severe and threatens to devastate the country’s tourism industry, which is worth $12.5bn a year.
In an announcement on 17 March, Egypt also announced that it was cutting dividend tax to soften the impact of Covid-19.
This article is published by MEED, the world’s leading source of business intelligence about the Middle East. MEED provides exclusive news, data and analysis on the Middle East every day. For access to MEED’s Middle East business intelligence, subscribe here
Coronavirus Covid-19: Oil rises amid pandemic stimulus efforts
Oil prices have increased on Friday, with economy stimulus measures by the world’s richest nations and central banks. The Covid-19 pandemic has hit many major European and American economies, contributing to oil’s continuing slump.
Reuters reported US President Donald Trump has said he might intervene in the Saudi Arabia-Russia price war.
According to the news agency, Brent crude futures LCOc1 rose by 7.4%, or $2.12, to $30.59 a barrel. US crude CLc1 futures for April rose by $2.23 to $27.45 while US crude contracts for May CLc2 was up $2.29, or 8.8%, at $28.20 per barrel.
OANDA senior market analyst Jeffrey Halley was quoted by the news agency as saying: “The outsized gains by WTI (U.S. crude) reflect the hope and not the reality of the US shale industry.
“Once this reality finally sets in, I expect the rally in oil to disappear as quickly as it began.”
Both Brent and US crude have shrunk to about 40% in the past two weeks, since the collapse of a supply cut agreement proposed by the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Price war between Saudi Arabia and Russia has led to over-production continuing to suppress oil prices.
UBS oil analyst Giovanni Staunovo said: “Positive risk sentiment and a weaker US dollar are helping crude on Friday. Also, comments from US president Trump that he might get involved in the oil [price] war at an appropriate time is supporting oil.”
Coronavirus global impact
Meanwhile, the Covid-19 death toll has crossed 10,000 worldwide. The confirmed case total has reached more than 224,000, with 84,000 recoveries reported as of the end of 19 March.
Italy has rapidly become the most affected country in Europe, now considered as the epicentre of Covid-19 outbreak. The death toll in the country has increased by 427 in the last 24 hours to 3,405, exceeding the total fatalities reported in China until now.
The UK’s central bank has further reduced interest rates to historic lows, in order to encourage banks to lend.
Coronavirus Covid-19: Oil prices rebound after hitting lowest point
Oil prices sprang up nearly 7% on Thursday after a three-day low. However, the coronavirus pandemic and oil supply surge still weigh heavily on the market.
According to Reuters, Brent crude LCOc1 jumped up by $1.43, or 5.75%. It stands at $26.33 a barrel, after sinking to $24.52 yesterday. US crude CLc1 gained $2.40, selling at $22.77 per barrel. This 11.8% gain comes after a 25% plummet the day before, reaching an 18-year low.
According to analysts, gains are not expected to last. Oil demand is still crashing due to the Covid-19 pandemic, compounded by the collapse of an agreement for supply cuts proposed by the Organisation of the Petroleum Exporting Countries (OPEC).
Because of this, price war between major oil producers Saudi Arabia and Russia continues to cause oversupply issues. Saudi Arabia is currently pumping at a record rate of 12.3 million barrels per day.
Yesterday, US senators pressured the Saudi Arabian envoy to the US to end the price war. US companies stand to lose millions while oil prices stay low. Separately, senators urged President Donald Trump to impose an official ban on oil from the two countries.
OANDA New York senior market analyst Edward Moya was quoted by the news agency as saying: “Monetary and fiscal stimulus will do little in returning energy demand back to normal but it will build confidence that the global economy will be in a better position once it is behind the virus.”
Coronavirus global impact
The Covid-19 death toll has increased to more than 8,800 globally. A total of over 218,800 confirmed cases and 84,000 recoveries have been reported as of the end of 18 March.
The World Health Organization noted that 80% of global coronavirus cases were reported in the Western Pacific and European regions.
The agency urged isolation, testing and treatment of every suspected case, along with tracing of every contact, in all countries.
Coronavirus may delay upcoming oil and gas projects in China
China has several large oil and gas projects under construction or commissioning stages throughout the country. Some of these projects may be delayed due to the locking down of entire cities and the travel restrictions imposed after the coronavirus outbreak. As a result, oil and gas personnel movement to project sites is curtailed and material movement has also been impacted.
Among upcoming oil and gas projects in China, projects located in the highly impacted Hubei province are more likely to face delays as it is the epicentre of the epidemic and the entire province was locked down due to the virus outbreak. Hubei mainly has petrochemical projects under construction and the realisation of 3.3Mtpa of petchem capacity is at stake due to the virus impact. These projects are also capital intensive with a total project cost of $2.4bn.
Hubei also has a natural gas pipeline under construction, ‘Xinqi’ pipeline. It is a major pipeline with a length of 840km and a project cost of $2.3bn and may face the heat.
In addition, the delay of the projects can have ripple effects globally due to their cross-border dependencies, especially the LNG regasification projects. China mainly sources LNG from Australia, Qatar, and Malaysia. Possible delay in the construction of LNG regasification terminals in China can, in turn, affect the plans of LNG suppliers, who might have signed contracts for exports to these terminals. FPSO deliveries to international clients are also at stake, as China is a major hub for the construction of these vessels.
Though China is not really known for upstream production projects, a few important projects are in progress in offshore locations such as the Bohai Bay, East China Sea, and the South China Sea. These projects may not be delayed as apparently there is no interruption in operations at the existing offshore projects, especially in Bohai Bay. There are four unconventional projects as well, and these are also unlikely to be delayed due to their location in the least affected provinces.
The impact of the coronavirus on other segments such as liquids storage projects is also likely to be minimal, including on the major projects, ‘Zhanjiang IV’ and ‘Shanshan Expansion’. Each of these projects has a capacity of 44Mmbbl and project costs of $2.5 bn, and $1.6bn respectively.
Coronavirus Covid-19: US crude falls to 17-year low amid lockdowns
Oil prices have dropped for a third straight day on Wednesday, as US crude futures sank to a 17-year low. The coronavirus pandemic has caused travel restrictions and social lockdowns, contributing to market instability.
According to Reuters, Brent crude prices down by $0.78, at $27.95 a barrel. This fall of 2.71% seems small compared to the 4.27% fall in US crude. The selling price for this was down $1.15 cents, at $25.80 per barrel. Earlier in the day it fell to $25.68, the lowest price since May 2003.
In a note, Goldman Sachs said : “The oil demand collapse from the spreading coronavirus looks increasingly sharp.”
Larger economies are set to release trillions of dollars to reduce the fallout from the Covid-19 outbreak. Many nations are also imposing social restrictions of levels not seen since the Second World War.
Meanwhile, price war between major oil producers Saudi Arabia and Russia continues. Since the collapse of an agreement on supply cuts proposed by the Organisation of the Petroleum Exporting Countries (OPEC), the nations have continuously increased production. Outsiders such as the US have called for de-escalation.
The suggested cut of 1.5 million barrels per day would have countered lower demand due to coronavirus outbreak. As it stands, investors expect a large over-supply of oil this year.
CMC Singapore markets analyst Margaret Yang said: “A deeply imbalanced supply and demand relationship will keep putting oil prices under pressure.
“Major oil producers are ramping up oil supply in a time when global demand is dampened by border controls and traffic bans.”
Coronavirus global impact
The Covid-19 death toll has increased to more than 7,900 globally. A total of more than 198,000 confirmed cases and 81,000 recoveries are confirmed as of the end of 17 March.
The World Health Organization has called for countries in South-East Asia to implement ‘aggressive’ measures to fight the COVID-19 pandemic.
Case numbers are now growing faster outside China than within. Europe is now considered the epicentre of the virus, and several countries have enacted travel bans. These include the US banning travel from Europe, lowering kerosene demand.
How the Covid-19 coronavirus is affecting the offshore industry
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.
On 1 January, a barrel of crude oil sold for $67.05 on New York’s NASDAQ exchange. At the time of writing, it is trading at around $30.00 per barrel. Companies’ oil reserves are worth around half what they were at the start of the year. The value of giants like BP reflects this: Today, BP’s market cap is worth 51% of what it was at the start of January.
2. Demand drops
Oil price wars began with a decrease in supply and demand within China. As the virus spreads, other governments expect similar effects.
Last week, Austrian oil company OMV said Europe’s demand was steady, except for kerosene. As governments advise people to reduce social contact and much international travel is banned, less air travel means less kerosene consumption. This is particularly noticeable in transatlantic flights after the US stopped all travel with Europe.
As demand decreases in Europe and the US, China is hoping to restore production. However, in its monthly report, the International Energy Agency predicted an annual decrease in demand of 90,000 barrels per day, the largest fall in a decade.
3. Rig infections
Last Wednesday, Norwegian oil and gas company Equinor announced an offshore worker had contracted coronavirus. The employee worked on a rig in the Martin Linge field in the North Sea.
On Tuesday, an Equinor spokesperson told Offshore Technology: “The person confirmed with Covid-19 was transported to shore last week and is now in home quarantine in accordance with regulations from Norwegian authorities. No new cases of Covid-19 have been confirmed on the installation following testing of personnel on the rig.
“We are monitoring the situation closely and we have established procedures to handle Covid-19 cases in our operations.”
Work on the rig is proceeding with production as normal, but non-critical tasks are using reduced manpower. Equinor said it has asked downstream staff to work from home and has enforced travel restrictions.
4. Travel restrictions and office closures
Equinor is not the only company enforcing travel restrictions. Royal Dutch Shell was one of the first companies to announce it was suspending travel for its employees, and others then did the same.
US oil company Chevron has asked employees to defer travel, and it was among the first to send downstream employees home. The company sent employees at its London offices home on 26 February after an employee displayed “flu-like symptoms”.
Chevron said it is screening workers and visitors. A spokesperson told Offshore Technology that screening levels were “based on criteria that include local health authority recommendations and regulations, the number of recent travellers at the facility and the capability of health infrastructure in the community.”
“Decisions on working from home and specific travel guidelines will be made locally, based on local circumstances and in consultation with appropriate experts,” the spokesperson said.