An analysis by Rystad Energy has revealed that 59 of the 213 drilling rigs, including 37 submersibles and 22 drill ships, operating globally may be permanently shut down. The demand for floaters, which revived globally in January, was impacted due to Covid-19 pandemic. The declining trend is expected to continue for the foreseeable future. The global demand for rigs was 129 rig years in 2019 and is predicted to drop to 110 rig years in 2020.
The global oil demand is expected to take more time to revive due to rise in the number of Covid-19 cases. The International Energy Agency predicts that global oil demand for 2020 will be at 91.7 million barrels per day (bpd), a decline of 8.4 million bpd from last year. Oil consumption worldwide is expected to increase by 1.7 million bpd by end of Q4, compared to September quarter.
Libya has decided to restart oil operations at its last field, after the country’s civil war ended in a truce. The daily oil production in the country as a result will increase to one million bpd. The restart of Libyan operations is an obstacle for OPEC+ as it plans to increase crude prices, with many countries reimposing coronavirus lockdowns. The Brent Crude oil price dropped by 33% year-to-date and is placed between $40 and $43 per barrel for the past few weeks.
The oil service industry is increasing their focus on energy transition businesses to prepare for the new changes induced by the coronavirus pandemic. Major service companies such as Baker Hughes, Schlumberger and Halliburton’s finances are steadily recovering after the pandemic wreaked havoc in the first half of the year. Energy transition is expected to help these companies recover in the post Covid-19 scenario.