The coronavirus outbreak has significantly impacted the oil industry in several ways:
1) Demand for oil has dropped as economic activity has slowed, particularly in China, leading to an oversupply and subsequent crash in oil prices.
2) Travel restrictions and quarantines have reduced demand for kerosene as air travel has decreased.
3) Offshore oil rigs and production sites have implemented screening and introduced restrictions in response to infections among offshore workers living and working in close quarters.
4) Major oil companies have suspended non-essential travel and sent some downstream employees home in response to the pandemic.
3. Overview
The World Health Organisation has declared the Covid-19
coronavirus outbreak a pandemic, and many companies are taking
precautions against the impact and spread of the virus.
The virus has forced companies to slow or halt physical operations,
impacting production in the upstream sector. Meanwhile,
downstream operations are upgrading their systems and pushing
to work more flexibly.
Offshore Technology examines the measures put in place and
predicts the potential future impact of the Covid-19 coronavirus on
the offshore industry.
4. OIL PRICE
CRASH
One important impact of the coronavirus outbreak on the
downstream oil industry is that the price of crude oil has fallen
significantly in a short time, taking billions off the stock prices
of major oil and gas companies. Covid-19 was first identified in
China, where it caused an economic slowdown for the world’s
largest energy consumer. The decrease in demand led to fears
of over-supply for fuel and oil products, and a resulting fall in
prices.
5. Demand
Drops
Oil price wars began with a decrease in supply and demand
within China. As the virus spreads, other governments expect
similar effects.Last week, Austrian oil company OMV said
Europe’s demand was steady, except for kerosene. As
governments advise people to reduce social contact and much
international travel is banned, less air travel means less
kerosene consumption.
6. RIG
Infection
Last Wednesday, Norwegian oil and gas company Equinor
announced an offshore worker had contracted coronavirus.
The employee worked on a rig in the Martin Linge field in the
North Sea. On Tuesday, an Equinor spokesperson told Offshore
Technology: “The person confirmed with Covid-19 was
transported to shore last week and is now in home quarantine
in accordance with regulations from Norwegian authorities.
7. Travel
restrictions
and office
closures
Equinor is not the only company enforcing travel restrictions.
Royal Dutch Shell was one of the first companies to announce
it was suspending travel for its employees, and others then did
the same.US oil company Chevron has asked employees to
defer travel, and it was among the first to send downstream
employees home.
8. Conclusion
08Chevron said it is screening workers and visitors.
A spokesperson told Offshore Technology that
screening levels were “based on criteria that
include local health authority recommendations
and regulations, the number of recent travellers
at the facility and the capability of health
infrastructure in the community.”
9. We are a full-service market-research consultancy working
with our global partners on result-oriented research,
enabling them to take informed strategic decisions for their
business and fuel decisions that matter.
Apelo Consulting
www.apeloconsulting.com
