Page 5 - NorthAmOil Week 19

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China’s traffic levels are slowly returning to normal after the central government eased its movement restrictions.
Asian sectors squeezed
Asia’s oil and gas sectors have been under enor- mous pressure following this year’s crash in energy prices and the destruction in global energy demand precipitated by the COVID-19 pandemic. While depressed international oil prices continue to squeeze upstream projects, the downstream appears to be on the rebound as regional oil prod- uct demand gradually returns in line with an easing of social quarantine measures.
India’s leading upstream developer, state- run Oil and Natural Gas Corp. (ONGC), could see losses from its natural gas business climb to INR60bn ($791mn) in financial year 2020-2021, with the company struggling to cover the high cost of production from older fields after gov- ernment-mandated gas prices hit historic lows last month.
At the other end of the sector, meanwhile, state-run Indian Oil Corp. (IOC) revealed this week that its refining output was expanding and was likely to continue doing so. After the coun- try’s largest refiner trimmed operating rates at its plant to nearly 45% of their designed capacity, runs have rebounded to 60% of capacity and are on track to reach 80% by the end of May.
China’s downstream also appears to be enjoying a slow return to normality, with crude imports rising month on month, levels of auto- motive transport rising and state and private refiners alike raising refining runs.
The country imported 40.43mn tonnes (9.88mn bpd) of oil in April, according to the General Administration of Customs (GAC). The figure was inevitably down from the 10.68mn bpd recorded in April 2019 but was higher than
the 9.72mn bpd record in March. China only began easing its social restrictions last month and has been eager to ramp up economic activity in the ensuing weeks.
If you’d like to read more about the key events shaping Asia’s oil and gas sector then please click here for NewsBase’s AsianOil Monitor.
European profit pain
Norway’s Equinor has become the latest European major to post a loss for the first quarter, of $705mn. This marks its third quarterly loss in a row and was the result of hefty impairments. Even with one-off items excluded, the state producer saw its operating income plunge by 98%, as its margins took a ham- mering from low oil and gas prices.
As with Royal Dutch Shell, however, Equinor has prudently reduced its dividend by two thirds to save cash, on top of a series of other cost-cutting measures. Its output also surged to an all-time high of 2.23mn boepd on the back of continuing growth at the giant Johan Sverdrup oil project. Still, its production will be restricted starting next month as a result of OPEC-style cuts imposed by the Norwegian government.
While Norwegian operators have scaled back exploration spending significantly, Equinor, Austria’s OMV and the UK’s Neptune Energy have secured approvals this month to spin the drill bit at three sites. UK energy services firm Petrofac also had some good news last week, scoring over $100mn in North Sea contract renewals. This hardly makes up for the $1.5bn in contracts it had won in the UAE that were can- celled in April, however.
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