New Normality and Peak Oil: New Themes for the IndustryBy Peter Appleby | Fri, 06/19/2020 - 17:07
Another week of COVID-19 related news saw a BP write-down arrive, while the UAE’s Energy Minister spoke positively of a return to normal pricing despite the current volatility in the markets.
BP, one of the original so-called Seven Sisters and still one of the largest oil companies in the world, is to write-down some US$18 billion of oil and gas assets due to the price drop caused by COVID-19. The slashing of budgets that most operators carried out for 2020, and the growing attractiveness of renewable energies for the world’s energy mix, appears contrary to the direction of Mexico’s approach.
UAE Energy Minister Suhail Al Mazrouei helped boost oil prices this week as he discussed the “adequate” measures that OPEC+ countries had taken to restore order in the oil market. The minister, speaking on behalf of one of the world’s major oil produces, said that “we are confident that things will go normal and demand will be restored.” The question is when rather than if, he suggested. Markets responded well to the comments with oil prices climbing after this address.
Mexico’s Federal Consumer Protection Agency (PROFECO) this week dismissed claims from the American Petroleum Institute (API) saying Mexican energy authorities, including CRE, discriminated against US companies in their handling of permit approvals and closing of gas pumps. The API, which represents Chevron, ExxonMobil and Sempra Energy, claimed that approvals took far too long and that some gas pumps had been shut for minor or non-existent violations of regulations.
Rystad Energy’s annual review of world oil resources said this week that 282 billion boe had been effectively removed from the recoverable resources list following the impact of COVID-19 on the global oil industry. The price-pressure that the industry faces and the fact that peak oil has been brought forward following the pandemic again raises questions about the logic behind Mexico’s approach to private players in the oil industry.