The major energy companies have surpassed the fierce Corona pandemic that hit them over the past year, to start making profits for the first time from the end of 2019.
Global oil and energy companies achieved significant increases in profits in the first quarter of 2021, taking advantage of the increase in oil prices and the increase in global demand for oil after it surpassed the worst decline in fuel demand due to global closures to prevent the virus from spreading.
With record oil prices recovering from the low April 2020 level of $ 16 a barrel to about $ 67 a barrel this month, most companies were able to raise profits again, beyond the levels they were experiencing before the first outbreak of the Coronavirus pandemic.
Strong earnings for BP
The profits of the British company BP in the first quarter of the year amounted to about $ 2.6 billion, exceeding the profits for the same period in 2019 of $ 2.4 billion and more than 200% higher compared to 2020.
BP was supported by high oil prices and substantial revenues from trading in natural gas.
A energy company said it was committed to buying back shares after its net debt fell below its target of $ 35 billion before the expected date.
“BP should be able to buy back at least $ 10 billion between 2021 and 2025,” analysts at Jefferies said.
As for the French energy giant Total, it has already returned to its high results, as it was before the crisis, and was able to record profits of about $ 3 billion in the first three months of 2021, up 69% from last year and 9% from the first quarter of 2019 of 3.1 Billion), before the crisis.
This jump comes after it recorded profits of only $ 34 million last year, when the oil and gas market was low due to the Coronavirus crisis.
The French company has benefited from the increase in oil prices, as the average price of North Sea Brent reached 61.1 dollars over the first quarter, compared to 50.1 dollars in the previous year and only 44.2 dollars in the fourth quarter of 2020.
Total production of hydrocarbons, on the other hand, decreased by 7% in the first quarter over a year, in compliance with the decision of OPEC and its allies to support prices.
Total intends to invest between $ 12 billion and $ 13 billion in 2021, half of which will be devoted to its growth, as “approximately 50% will be allocated to renewable energy and electricity sources,” areas it intends to engage in increasingly.
And the oil giant “Royal Dutch Shell” made a net profit in the first quarter of 5.7 billion dollars, thanks to the increase in oil prices.
The Dutch-British group stated in a statement that it had incurred losses of $ 24 million in the same period in 2020 at the start of the health crisis and $ 21.7 billion for the entire last fiscal year.
Shell, like the rest of the sector, has benefited from the sharp rise in oil prices, with prices now hovering around $ 65, taking advantage of hopes for an economic recovery due to vaccination and the gradual lifting of restrictions, as well as the efforts of OPEC member states and its partners to reduce production.
Shell indicated that its profits improved thanks to the $ 1.4 billion gains from the sale of assets.
At the beginning of the year, the group revealed details of its plan to become carbon neutral by investing in new energies and reducing its dependence on oil.
It expects to reduce its oil production by 1-2% annually. Shell had previously indicated that its oil production reached its peak in 2019, that is, before the epidemic came and dealt a severe blow to the oil market.
Norwegian Equinor’s profits in the first quarter were $ 5.5 billion, also exceeding its pre-pandemic profit of $ 4.2 billion.
Equinor also raised the dividend to 15 cents a share, but that was also less than 26 cents a share in 2019.
“The view given is that capital is being held to allow the acceleration of new energy investments,” City said.
Spanish Repsol announced a 5.4% increase in adjusted net profit in the first quarter to 471 million euros, but it was 24% less than the profits for the same period in 2019.
The company cut cash payments for 2021 and 2022 to 0.6 euros per share from one euro per share, but said share buybacks could push returns to more than euros per share by 2025.
China Petroleum and Chemical Corporation (Sinopec) turned profitable in the first quarter after losing a year ago, and net profit was 18.54 billion yuan ($ 2.86 billion) amid a recovery in oil prices and strong demand for refined oil products.
The largest refinery in Asia suffered a loss of 19.15 billion yuan in the first quarter of last year, according to international accounting standards, as the Corona virus pandemic reduced fuel consumption.
Sinopec said in a statement to the Shanghai Stock Exchange, “The company makes major adjustments to exports of refined oil products according to the changes in the market and maintains stable and high operating rates for refining facilities.”
S-Oil expects further improvement
S-Oil, South Korea’s third largest oil refiner, said that refining profits will improve further in the second quarter of the year as fuel demand and economic activity recover amid global vaccination campaigns.
S-Oil, the largest shareholder of Saudi Aramco, reported an operating profit of 629.2 billion won ($ 566 million) in the first quarter, the highest since the second quarter in 2016.
She attributed this to increased profit margins from products and gains related to inventories.
Last year, the company lost 1 trillion won in the same period as a result of inventory-related losses due to lower oil prices and the collapse in fuel demand amid restrictions to contain Covid-19.
$ 80 a barrel
It is expected that the profits of energy companies will increase during the current year, given successive increases in oil prices, as they are currently approaching $ 70 a barrel, while the commodity research team at Goldman Sachs Bank of the United States expected commodity prices to rise 13.5% during the next six months Roll back from coronavirus restrictions, lower interest rates and a weak dollar.
The bank now expects Brent crude to rise to $ 80 a barrel and US West Texas Intermediate crude to $ 77 over the next six months.
“We expect the biggest jump in demand for oil at all, an increase of 5.2 million barrels per day over the next six months,” the bank said, referring to the acceleration of vaccinations in Europe and the liberalization of latent demand for travel.
He said the easing of international travel restrictions in May would lead to a recovery of 1.5 million barrels per day in jet fuel demand.