The World in Freefall
All over the world, there is only one topic of conversation: Covid-19. The pandemic has resulted in some welcome shows of solidarity, as countries help each other out with medical assistance, urgent supplies and, importantly, research into vaccines and cures. It will undoubtedly have some positive long-term effects on the environment, as people appreciate the clear skies, low pollution and sounds of birdsong resulting from fewer planes and cars. Working from home and videoconferencing may well become the norm.
Like many industries, however, oil and gas has been severely hit by the fallout from the pandemic, with both demand and the price of oil slumping at a time of already worldwide surplus, exacerbated by additional pumping by Saudi Arabia and Russia as they follow their own competitive agendas. A number of E&P companies are reported to be cutting their CAPEX budgets for 2020 by around 20%, which will see many planned exploration projects, particularly in capital intensive areas like deepwater, mothballed for the foreseeable future. As a debt-heavy industry, the security for which is usually oil and gas reserves – now worth a lot less than they were just a few months ago – we can expect to see bankruptcies, in the service sector as well as E&P companies of all sizes. These will result in further job losses, in an industry that was only just beginning to climb out of the last slump. It is a miserable scenario.
Oil will recover, but it will take time. Because of the glut in supply, an increase in demand will not immediately result in rising prices – although the cheaper energy resulting from this lag in oil price increase could help world economies recover faster once the virus restrictions are lifted.
You will be pleased to hear that GEO ExPro will continue to publish both online and in hard copy, bringing you the information on exploration and technology in the upstream geosciences you need in order to be ready to bounce back when the crisis is over. The print magazine will be distributed to companies and subscribers worldwide as usual; many conferences and meetings have been postponed until later in the year, so we will also reserve copies of each edition to be distributed at those, whenever they may be held.
I would like to take this opportunity to send best wishes from the whole GEO ExPro team to anyone affected by the virus, either in health or in business, and look I forward with you to better times ahead.