Oil’s demand expected to return more slowly than first thought
The recovery in global oil demand looks like it’s going to be slower than expected, as a resurgence in Covid-19 cases forces the re-imposition of lockdowns.
All three of the world’s main oil forecasting agencies — the International Energy Agency, the U.S. Energy Information Administration and the Organization of Petroleum Exporting Countries — have increased their assessments of demand destruction in the third quarter of 2020, even as they see the depth of the crisis in the second quarter being less bad than previously thought.
In their latest monthly reports, the three agencies all saw third-quarter global oil demand falling further behind last year’s level than they did in June, as the chart above shows. The average loss compared with the same period in 2019 is now 7.5 million barrels a day, compared with less than 7 million forecast a month ago and 6.5 million seen in May.
Did Mexico’s oil reform benefit from bribes?
Mexican legislators allegedly took bribes to vote in favor of a landmark energy reform during the previous administration, and an ex-head of the country’s oil giant will shed light on the matter, President Andres Manuel Lopez Obrador said on Wednesday.
Lopez Obrador said there was “a lot” of corruption at the stateowned oil company Pemex during the previous administration, when congress passed landmark laws to open the governmentrun energy sector to private investment. He said Emilio Lozoya, a former head of the producer, will cooperate with investigations once he’s extradited from Spain on corruption charges.
Lopez Obrador has railed against the energy reform since it was first passed in 2013, saying it privatized energy at the expense of the public good. Five years later, as president, he halted auctions of oil blocks and moved to revive the heavily indebted Pemex. Now, the corruption case involving Lozoya has given him a platform to reexamine the reform and may also help boost his ruling party’s campaign ahead of mid-term elections next year.
Oil company turns to high-tech helmets
A test of high-tech helmets at French oil major Total's petrochemical plant in La Porte has led the company to deploy them as a COVID-19 safety measure at its facilities around the world.
Total and Vancouver, Wash.based RealWear, which makes the audio- and video-equipped helmets, announced the deal Wednesday morning. Financial terms were not disclosed.
Similar technology has existed for years, but RealWear's gear uses Microsoft Teams, a video conferencing platform that has become popular during the coronavirus pandemic. Using the voice-enabled software, plant employees wearing the smart helmet can work hands-free and share what they are doing and interact with engineers, vendors and experts in real time.
Q1 oil company write-downs total nearly $50B
Some of the largest U.S. oil producers collectively wrote down tens of billions worth of assets in the first quarter after the coronavirus pandemic plunged oil demand and prices.
Forty publicly traded companies wrote down a combined $48 billion worth of oil and gas holdings in the first three months of the year, according to a report published Wednesday by the Energy Information Administration. Writing down the value of assets, also called an impairment, happens when a company updates the estimated fair value of its oil and gas equipment, reserves and properties to reflect changing market conditions.
EIA’s list of U.S. oil producers include energy majors such as ConocoPhillips, large independents such as Occidental Petroleum and West Texas shale drillers such as Diamondback Energy. The companies collectively produced 6.1 million barrels per day of crude and other liquid fuels in the U.S., or about 30 percent of all the U.S. liquids production in the quarter. The list excludes companies that own refineries, including Chevron, which didn't write down assets during the first quarter, and Exxon Mobil, which wrote down some $3 billion.
“These companies’ asset impairments, when analyzed with respect to the estimated value of their proved reserves from 2019, reveal a significant decline in estimated cash flows from future production,” EIA said in the report.