BAKU, Azerbaijan, Feb.19
By Leman Zeynalova – Trend:
The five integrated supermajors – ExxonMobil, BP, Shell, Chevron and Total – posted a combined record loss of $76 billion in 2020, Trend reports with reference to Rystad Energy.
The major chunk of this loss, $69 billion, can be attributed to asset impairments and write-offs as the supermajors re-evaluated their strategy to focus on energy transition and become less dependent on petroleum. Their combined oil and gas output dropped by nearly 5 percent, or 0.9 million barrels of oil equivalent per day, in 2020 from the year before.
Rystad Energy forecasts that the majors’ net production will be around 17.5 million boepd in 2025 and peak at around 18 million boepd in 2028. “For context, our internal forecast in February 2020 – before the shockwaves from Covid-19 – stood at 19 million boepd for 2025 and 20 million boepd in 2028.”
“Some recovery can be expected in the near future as demand rebounds and oil prices cross the $60 mark. However, the key to success for the five majors over the next decade will be to strengthen their business in more resilient regions, restructure and resize to match the market needs, and pay back their high debt levels,“ says Rahul Choudhary, upstream analyst at Rystad Energy.
All the five majors reported net losses in 2020 with ExxonMobil reporting the largest at $22.4 billion, followed by Shell and BP which also incurred losses of more than $20 billion. Total and Chevron fared better than their peers, relatively speaking, as the two companies reported net losses of $5 billion to $6 billion.
European majors Shell and BP accounted for the largest year-on-year drop in production with about 300,000 boepd each, while ExxonMobil and Total cut their production by 200,000 boepd and 150,000 boepd, respectively. Chevron was the only major to increase its production in 2020, largely due to its $13 billion acquisition of Noble Energy that partially offset the production curtailments.
At the end of the year, the total spending cuts stood at $26 billion, or 32 percent of the five majors’ initially announced guidance. Most of the capex cuts relate to greenfield development projects as the majors wait for a recovery in prices and demand before moving ahead with new projects.
---
Follow the author on Twitter: @Lyaman_Zeyn