Amid the global pandemic, the process of transferring former PEMEX Director Emilio Lozoya back to Mexico to face corruption charges continues. With the former director agreeing to be moved, the process has taken a major step. Meanwhile, Shell is moving forward with a write down of up to US$22 billion of assets and oil prices remain consistent despite concerns about new virus outbreaks in different parts of the world.
Here’s the Week in Oil & Gas!
New COVID-19 cases in several US states and other countries put the fortitude of gradually strengthening oil prices to the test this week. Among the most worrying cases was that of Beijing, one of the world’s major oil consumers, where authorities reported new confirmed cases after two months of zero virus growth. Added to this was the report from Rystad Energy which suggested that Iraq would miss its OPEC+ production cut goal, weakening the group’s impact on the current oil glut. Yet, prices held firm. With more economies due to open over the coming week, prices could begin to climb again.
Royal Dutch Shell will write down up to US$22 billion in oil and gas assets following the hit it took from COVID-19 and its predictions of oil prices being depressed for the long term. Shell’s decision comes after news broke of BP’s US$18 billion write down made for similar reasons.
However, not everyone in the industry considers the situation to be so bleak. JP Morgan Head of Europe, Middle East and Africa Christyan Malek believes that prices could hit US$190 a barrel by 2025 as a “supercycle,” currently forming, is unleashed upon the industry. Though he does not suggest this will be the state of play in the long run, he believes prices will get stronger in the mid-term future.
Former Director of PEMEX Emilio Lozoya will be heading back to Mexico to face charges of corruption after he agreed to extradition from Spain where he is currently captive. The former director fled Mexico last year after a warrant for his arrest was issued. He was later captured by Spanish authorities in Malaga in February this year. The capture will be a boon for President Andrés Manuel López Obrador and his promise to rid Mexico of corruption.
Few choices are more important for the development of an oil field than the choice of the offshore structure that will be used to exploit the subsoil’s resources. Cayros Group, an independent firm that specializes in the delivery of technical support to the industry, recently carried out a study that detailed the best choice structures for different offshore situations. The report presents interesting findings that could influence future offshore developments for an industry entering a new phase.