OPINION: The havoc created by Covid-19 over the past two years has had a huge impact on the oil and gas business, which was already staggering from the ramifications of the 2014 crude price crash and the energy transition.
Seven years ago when the oil price crashed, companies cut costs, laid off staff and stopped investing as they waited for the inevitable market upturn.
The transition was not a big discussion topic until about 2019, when anthropogenic climate change was thrust into the political limelight.
As the Covid-19 outbreak rapidly became a pandemic, economic growth slowed as did demand for oil and gas.
The hit from these market-shaking events coincided with high-profile fires and floods in wealthy nations that brought home the impact of climate change to politicians and the public, who both demanded rapid change, particularly in Europe and North America.
For the E&P sector, it became even more difficult to secure internal and external finance to invest in oil and gas activities as sentiment turned against fossil fuels.
After largely successful Covid-19 vaccination campaigns in rich nations, the resulting resurgence in economic growth led to a spike in oil and gas prices caused by years of under-investment.
In addition, Covid-19 and sky-high energy bills have created huge problems in the industry supply chains.
Raw material and product costs have shot up; high energy prices have disrupted manufacturing; deliveries cannot be guaranteed due to shipping infrastructure issues; and wages are spiralling.
The E&P sector’s resilience is being tested like never before.
(This is an Upstream Opinion article.)
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