Coronavirus to Cut 2020 Oil, Gas Spend by $30B

February 28, 2020

Illustration; A rig and an FPSO - Credit: sadagus - AdobeStock
Illustration; A rig and an FPSO - Credit: sadagus - AdobeStock

The coronavirus outbreak could cut oil industry investment this year by tens of billions of dollars and delay the delivery of offshore installations currently being built at Asian yards, Oslo-based consultancy Rystad Energy predicted on Friday.

"Our current assessment forecasts that COVID-19 could result in global exploration and production (E&P) investments falling by around $30 billion in 2020," said Audun Martinsen, head of Rystad's oilfield service research.

Oil prices have slid by almost 25% this year on lower demand and slower expected economic growth, alarming major oil producers.

Lower oil prices will result in oil and gas companies scaling down their flexible investment budgets, especially shale operators in the United States as well as some offshore exploration and production players, Rystad said.

The virus outbreak could postpone deliveries of oil platforms and other equipment from yards by at least three to six months, due to shortages of staff or supplies, as well as travel bans, it added.

Out of 28 floating production, storage and offloading vessels (FPSOs) under construction, 22 are being built in China, South Korea, and Singapore, according to Rystad.

"Experts do not yet know when the effects of the epidemic will ease, but one thing remains clear: the situation will worsen in March and the impact of the virus is not limited to Chinese fabrication yards – it affects the entire global service industry," it added. 

(Reporting by Nerijus Adomaitis; editing by Philippa Fletcher)



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