Worries Mount as COVID-19, Oil Price Collapse BiteBy Peter Appleby | Fri, 03/27/2020 - 14:31
Headlines this week have been dominated by the COVD-19 crisis and the global oil price collapse impacting businesses around the world. While prices have showed signs of recovery throughout the week, the WTI, Brent and Mexican Basket benchmarks all continue their downward trend.
Operators Worldwide Make Cuts
Though news that operators worldwide would be cutting their expenditure through 2020 and beyond did not come as a surprise, it did come as an avalanche. Operators with commitments to Mexico including Murphy Oil, Shell, Equinor, Total and Chevron all announced their decisions to cut 2020 budgets earlier, while Eni – the first international oil company to produce in Mexico’s offshore arena since the Energy Reform – and fellow offshore operator Cairn Energy followed suit.
PEMEX Gets Downgraded
Leading global credit ratings agency Standard & Poor’s has cut PEMEX’s global scale foreign currency and local currency rating. The blow comes due to the agency’s belief that the oil price crash will restrict PEMEX’s ability to carry out its business plan “because weaker cash flow will limit the ability to fully fund its multi-annual capital investment needs.” With S&P having also cut Mexico’s sovereign rating, the country appears less able to support PEMEX going forward.
PEMEX Slashes Maya Crude Price
PMI took US$2 from its Maya Crude barrel price for April on the US Gulf Coast, European, Indian and Middle Eastern markets, increasing the barrel’s competitiveness in the flooded market.
The cut is a symbol of the tough times the company and the industry at large are enduring as two energy world powers, Saudi Arabia and Russia, start a war of attrition, while oil demand falls around the world.
Gas Sales Drop as Mexico Moves into Phase 2
Falling gas sales despite cheaper prices appeared to show us that COVID-19 fears caused people to travel less in March, while Mexico having officially entered Phase 2 of the virus spread has seen sales dwindle further. With cases still spreading and the national lockdown set to continue for the near future, ONEXPO’s Roberto Díaz de León rules out the possibility of a shortage of gasoline and told El Universal that Mexico’s stored gas was sufficient.
Dos Bocas Works Could be Suspended
With non-essential work premises closing, the construction of the Dos Bocas refinery is likely to be suspended soon. The US$8 billion refinery in Tabasco has yet to be closed and has doctors on site to look after staff.