A slump in the global demand for oil has resulted in massive losses for giants such as Royal Dutch Shell, BP and ExxonMobil.
An industry already facing a difficult transition as the world looks to cleaner energy sources, oil and gas companies have been badly affected by the Covid-19 crisis as major industries, such as travel and tourism, have less need for petrochemical products.
The International Energy Agency predicted at the end of last year that recovery was likely to be slow, and possibly would not return to pre-crisis levels until “the latter part of the 2020s“, far longer than initially hoped.
This blow to the balance sheets could not come at a worse time for the big players of the industry, who have been trying to transition by investing significant amounts of cash into low carbon technologies, such as hydrogen, biofuels and renewables.
In addition, the Organization of the Petroleum Exporting Countries (OPEC) is holding back millions of barrels of crude.
US firm ExxonMobil reported the biggest loss, of $22.4bn, but other companies have not fared much better.On the same day, BP revealed that it had made its first annual loss in ten years with a shortfall of $18.1bn, while Royal Dutch Shell posted a net loss of $21.7bn.
Shell also recently announced the loss of 9,000 jobs, including 330 in the North Sea, as it cuts back production in order to manage the “significant uncertainty” the oil and gas industry faces in the wake of the coronavirus pandemic.
Despite this, the company raised dividends for the second consecutive quarter to 17.35 cents per share.