The following has been adapted from Bloomberg (via New Straits Times Singapore).
(Bloomberg) -- great swathes of petroleum industry to start shutting down
coronavirus destroyed demand (for oil)
storage started filling up
resorted to ocean-going tankers to store crude
shipping prices stratospheric as industry runs out of tankers
specter of production shut-downs
spurred world leaders to join forces to cut production
scale of crisis dwarfed their efforts
failing to stop prices diving below zero
shut-downs now reality
It’s worst-case scenario for producers, refiners
- We are moving into end-game
- Early-to-mid May could be peak
- We are weeks, not months, away from it
U.S. shale patch leading output cuts
in U.S. rapid drop in number of oil rigs in operation
last week fell to four-year low
Before coronavirus 650 oil rigs in U.S.
By last Friday 40% stopped working only 378 left
production needs to slow down
output in Texas, New Mexico, North Dakota will fall much faster than expected
severity of price pressure catalyst for immediate turndown and shut-ins
ConocoPhillips, Continental announced plans to shut in output
Oklahoma allow oil drillers to shut wells without losing leases
New Mexico made similar decision
North Dakota shale witnessing rapid retrenchment
Oil producers closed 6,000 wells, 405,000 barrels a day
30% of state’s total
output cuts not limited to U.S.
Chad, Vietnam, Brazil producers reducing output
even for Exxon Mobil, BP it’s a challenge
every week 50 million barrels of crude going into storage
enough to fuel Germany, France, Italy, Spain, U.K. combined
At that rate, the world will run out of storage by June
What’s not stored onshore, is stashed in tankers
many tankers at anchor off California
Before crisis hit, world consumption 100 million barrels a day
Demand now 65 - 70 million barrels
in worst-case scenario, about 1/3 of global output needs to be shut
Refiners Shut
the great shutdown will spread through oil refining too
past week, Marathon stop production in San Francisco
Shell idled several units in three U.S. refineries
across Europe, Asia, many refineries running at half rate
U.S. processed 12.45m bpd, week to April 17, lowest in 30 years
More refinery shutdowns coming
in U.S. demand is still contracting
global refineries could halt 25% capacity in May
“No one is going to be able to dodge this bullet.”
©2020 Bloomberg L.P.
My comments : Well except maybe Petronas can dodge the bullet. Petronas has said they are not shutting down any of their 18 oil rigs in Malaysia. Maybe Petronas can beat the whole world.
Folks, this is not happy news. Bad things are happening and are going to happen in the world economy. Not just in the oil industry.
There is a saying in Tamil 'pretending there is no sand sticking to your moustache after falling down on your face '.
In other words super hero behaviour. At a time like this we do not need super hero behaviour. It is more professional to face the real situation and also to be fully transparent. No need to be hiding things, covering up, not telling the full story etc.
From reading the Bloomberg article above we can see how the rest of the world is handling this. They discuss all their issues openly and freely. Then the clever people who know the business can come up with solutions or how to minimise the pain etc.
We are all in it together.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.