August 2020 UPDATE

 

Rystad Energy Insights is a monthly newsletter that consolidates our industry and market views and provides an update of highlighted events and webinars.

UPCOMING EVENTS

2020 Virtual Annual Summit - APAC/Americas/EMEA
Online Event
September, 2020

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Cost Solution Virtual Event
Online Event
September 2, 2020

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Energy Metals Virtual Event
Online Event
September 9, 2020

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UPCOMING WEBINAR

Gas & LNG Markets webinar: After record low prices, is the LNG market turning bullish?
Content webinar
August 27, 2020

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Get the latest market update from our expert Carlos Torres Diaz

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INDUSTRY VIEW

"US presidents and oil production: A deep dive into Obama and Trump records, Biden’s proposed plan"
As the 2020 presidential election in the US is approaching, Rystad Energy has looked at how the country’s oil industry has performed under different presidents and evaluated the plans of this year’s candidates, shedding light on what the US oil industry may have in store in the next four years.
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"Even at $40 WTI, about 150 more North American E&Ps will need Chapter 11 protection by end-2022"
The Covid-19 pandemic has added severe financial strain on a North American upstream industry that was already reeling under billions of dollars of debt. With WTI climbing past $40 a barrel, most exploration and production firms (E&Ps) have been able to keep their head above water, but unless prices strengthen further about 150 more E&Ps will need to seek Chapter 11 protection through 2022.
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"Once the costliest for deepwater opex, South America emerges as cost-saving champion in 2020"
South America has made a cost-cutting leap since 2013, when it was the world’s most expensive region for deepwater oil and gas production costs. Average operational expenditure (opex) per barrel of oil equivalent has more than halved since then, from roughly $26 to $12.7 in 2020.
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"US shut-in oil comes back: Most curtailed output is set to return by the end of August"
Most US onshore operators will restore nearly all shut-in oil volumes by the end of the third quarter, with only a handful maintaining some level of curtailment for the rest of the year, a Rystad Energy analysis of 25 public oil operators’ second-quarter earnings statements shows.
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"Covid-19 pushes OFS headcount to lowest level in over a decade, revenue per employee set to decline"
The oil market turmoil brought on by Covid-19 has led to lower-than-anticipated activity and delayed projects, forcing the industry to deploy cost-cutting measures. A Rystad Energy analysis of the top 50 oilfield service (OFS) firms shows that staffing is set to reach its lowest level in more than 10 years, with the anticipated revenue per employee also declining towards the previous downturn’s level.
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"US permits for new horizontal drilling dip to 10-year low, hinting no strong rebound in 2020 activity"
US horizontal drilling activity in oil basins, which has plummeted due to the Covid-19 pandemic, is not likely to materially recover this year, a new Rystad Energy analysis shows. Drilling permits, which are increasingly reliable indicators of future activity levels, dipped to a 10-year monthly low this July, with only 454 awards.
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"Libya’s oil blockade is expected to persist further, shrinking upcoming global production glut by 65%"
Libya’s oil blockade is now entering its seventh month and the war-torn country’s oil output is hovering at just 100,000 barrels per day (bpd) instead of the pre-crisis 1.2 million bpd. Without a peaceful solution on the horizon, Rystad Energy is further pushing back its expected restart to the fourth quarter of 2020, a change that will help reduce the expected global production surplus to just 58.6 million barrels, or to about one-third of our previous forecast.
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"A slow 1H for utility PV and wind projects in Australia"
The first half of 2020 has certainly been a wild ride for the Australian renewables market, which faced raging bushfires, a global pandemic and a logjam of 1.5 GWAC of new wind and PV assets connecting to the grid, leading to deflated wholesale prices and severe connection delays. 
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"Chapter 11 and M&A outlook in US shale"
Several large and small independent US oil and gas producers have filed for bankruptcy this year as their debt burden peaked and hopes for cash flow recovery plunged, with WTI crude oil prices still remaining in the low $40s.
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"South America will lead the recovery of offshore projects"
Oil projects off the coast of South America, have lower breakeven prices and competitive payback times in comparison to similar projects in other parts of the world, which makes them more resilient in the current turbulent times.
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"Global OCTG market demand struggles during the Covid pandemic"
The Covid pandemic and its impact on the oil and gas markets has been felt in the OCTG markets.  Rystad Energy predicts that global OCTG demand will now fall 27% year-on-year, this year, to just 12.16 million tonnes. 
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