Oil giants cut their expenses by 20% and Washington is giving up its reserves


The cuts, which have already been announced by five major oil companies, including Saudi Aramco and Royal Dutch Shell, together constitute a decline of 20% of its initial spending plans.And Norway’s Ecinor said on Wednesday that it will cut capital spending by about two billion dollars, while Chevron said on Tuesday that it will reduce its capital spending this year by 4 billion dollars.

Other companies, such as US giant Exxon Mobil and Britain’s BP, say they will cut capital spending, but have not given figures yet.

Brazilian oil company Petrobras said it will cut production in the short term, delay the payment of dividends and reduce its investment plan for 2020, among other measures aimed at reducing costs in the face of the Corona virus pandemic.This comes after oil prices have fallen 60% since January to less than $ 30 a barrel. Brent crude hit $ 26.70 yesterday, as falling fuel demand overshadowed a massive US economic stimulus package.

The combined debt of Chevron, Total, BP, Exxon Mobil and Royal Dutch Shell combined reached $ 231 billion at the end of 2019, which is just under $ 235 billion it recorded in 2016 when oil prices also tumbled to less than $ 30.

The Executive Director of the International Energy Agency, Fatih Birol, said that the global demand for oil may fall by up to 20 million barrels per day, or 20% of the total demand, while there are 3 billion people around the world who are currently staying their homes due to the outbreak of the Corona virus. Birol told a conference call today, Thursday, that the agency, which coordinates energy policies for industrialized countries, will provide clearer forecasts and time frames within two weeks.

American Reserve

In a parallel line, the US Energy Department said on Thursday that it had abandoned plans to purchase crude oil for the country’s emergency reserves due to the lack of congressional funding, which would deal a blow to President Donald Trump’s plan to ease the burden on energy companies amid the collapse of global oil markets.

Energy Secretary Dan Bruillett had asked lawmakers $ 3 billion to buy up to 77 million barrels to fill the strategic oil reserve, but the stimulus package approved by the Senate on Wednesday did not include this funding.At a press conference earlier this month, Trump issued directives to the Energy Department to take advantage of low oil prices and fill the Strategic Petroleum Reserve to its “maximum.”

The purchase of oil is a tangible move by the administration to help small and medium-sized oil production companies, many of which may face bankruptcy due to falling prices.

Reducing the demand for Saudi oil

In addition, sources in the sector stated that several European oil refineries and in the Nordic countries will receive less quantities of crude from Saudi Arabia in April, indicating the scarcity of demand for additional supplies offered by the Kingdom as part of its efforts to enhance its market share.

Saudi Arabia, the world’s largest oil exporter, plans to boost its exports sharply after the collapse of a three-year agreement between the Organization of Petroleum Exporting Countries (OPEC) and other producers led by Russia to cut supplies earlier in the month.

But with demand collapsing as well due to government restrictions aimed at containing the outbreak of the Corona virus, oil companies are reducing the operating rate of refineries and are not in a rush to take additional Saudi barrels, the sources said.A commercial source, speaking on condition of anonymity, discussed the matter with oil companies: “There is definitely a reduction in the operating rates of refineries … so it is difficult to allocate a lot.”

Two sources in the sector reported that Shell is among the international oil companies that will take less Saudi crude. A source said that companies are seeking to reduce their shares of Saudi crude by up to 25%.


Please enter your comment!
Please enter your name here