Page 6 - AfrOil Week 20 2020

AfrOil NEWSBASE’S ROUNDUP GLOBAL (NRG) AfrOil
NRG: A slow and painful recovery
The market may show early signs of a recovery, but for many companies, the worst is yet to come
COMMENTARY
WELCOME to the second edition of NewsBase’s Roundup Global (NRG), in which our team of international editors provide you with a snap- shot of some of the key issues affecting their regional beats. Get the NRG Oil & Gas Editor’s Picks to your inbox every week for free. Just sign up here.
Oil prices have regained some ground since plunging to near two-decade lows last month, but the recovery will be slow and painful. Oil and gas companies across the globe saw their first-quarter earnings evaporate as a result of the market collapse in March. For many, the current quarter will be even more punishing.
Those producing countries that have imposed output cuts may have won praise for helping to rebalance the market. But their earnings will take an even greater hit if the gambit fails to deliver a meaningful rise in oil prices. Deep spending cuts announced earlier this year have led to record lows in drilling activity, putting unprecedented strain on contractors and suppliers.
Asian state aid
The oil price crash has sideswiped Asia’s energy markets, sparking legal battles and forcing gov- ernments to consider financial aid for those state-owned companies exposed to the current market volatility.
Three of India’s High Courts are reportedly
hearing five cases related to the settling of April crude oil contracts at negative rates, with the Multi-Commodity Exchange’s (MCX) inabil- ity to account for negative pricing at the core of three of the disputes.
Indonesia, meanwhile, is understood to be reviewing plans for bailout for 12 state-owned firms, including national oil company (NOC) Pertamina and power utility Perusahaan Listrik Negara (PLN). Pertamina is set to receive the assistance after having seen fuel sales collapse in the wake of the government’s COVID-19 quar- antine measures.
Amid the doom and gloom there are signs that the industry is adapting, however, with projects being green-lighted and acreages being released.
State-owned Coal India Ltd (CIL) has invited bids for two coal-bed methane (CBM) devel- opments, opening the acreages to local and international players. CIL is looking to sign rev- enue-sharing agreements for the blocks, which are expected to require $325.9mn worth of investment. Adani, Essar and Reliance Industries Ltd (RIL) are understood to have participated in a pre-bid meeting.
State-run Oil and Natural Gas Corp. (ONGC) has awarded production enhancement contracts (PECs) covering 49 marginal fields to seven bid- ders. The company had invited bids for PECs
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