In the first half of this year, under the double attack of the plunge in international oil prices and the spread of the global COVID-19 epidemic, the performance of all oil and gas giants was poor, becoming one of the industry sectors most affected by external influences.
Huge losses, layoffs, business sales, and bankruptcies are all aggravating the entire oil and gas industry. The domestic “three barrels of oil” and the five major international oil giants including Shell, BP (British Petroleum), ExxonMobil, Total and Chevron are all under the pressure of a sharp decline in operating performance year-on-year. In the first half of this year, the eight global oil giants suffered cumulative losses of more than 340 billion yuan, and Exxon Mobil even set its worst performance record in more than 100 years since its establishment.
Most of the eight giants suffered tens of billions of losses
On August 30, as Sinopec released its half-year results for 2020 Report, the “Three Barrels of Oil” mid-year report card was fully disclosed. Among them, Sinopec and PetroChina had a total net loss of more than 52.8 billion yuan, and CNOOC achieved a net profit of 10.38 billion yuan, a year-on-year decrease of 65.7%.
Royal Dutch Shell, BP, Exxon Mobil, Total, Chevron and ConocoPhillips have all announced second-quarter financial reports. According to statistics, the total losses of the six major multinational oil companies in the second quarter reached US$53.693 billion (approximately RMB 374.8 billion).
Specifically, the second quarter report data released by Shell showed that its net loss was US$18.13 billion, including an asset write-down of US$16.8 billion. Adjusted profit was $638 million, compared with net profit of $3.5 billion a year earlier. The second quarter report released by BP showed that BP recorded a net loss of US$21.213 billion. Judging from the amount of losses alone, it ranks first among the eight major oil giants, and the company’s debt has reached its highest point since 2015. To this end, BP has revised its long-term oil price forecast downwards and written down the asset values of multiple projects.
Exxon Mobil lost $1.1 billion in the second quarter, the company’s worst performance since World War II. In terms of revenue, ExxonMobil’s second-quarter revenue was US$32.6 billion, a decrease of 52.8% from the same period last year. Total and Chevron were the rare oil giants to be profitable in the first quarter of this year, but they still suffered large losses in the second quarter.
Total’s net profit in the first quarter was US$1.78 billion, a year-on-year decrease of 35%; its net loss in the second quarter was US$8.37 billion, and its total net loss in the first half of the year was US$6.6 billion. Chevron achieved a profit of US$3.6 billion in the first quarter, a year-on-year increase of 36%; it suffered a “Waterloo” in the second quarter, recording a total net loss of US$4.53 billion in the first half of the year, showing the lowest profit level in more than 30 years.
Oil giant saw layoffs again
Shell began taking the initiative of “voluntary resignation + compensation” for employees in May . In addition, Shell will also significantly reduce the scale of external recruitment; review contracts for expatriate employees to save money. There may be further layoffs and redesign of the company’s organizational structure in the future.
More than two months ago, when Chevron announced that it would lay off 10%-15% of its employees, ExxonMobil emphasized at its annual shareholder meeting that it currently had no plans to lay off employees. But more than two months later, everything changed. On September 2, a spokesperson for ExxonMobil said that the company may lay off employees globally and is currently evaluating.
On the same day, ExxonMobil announced a voluntary layoff plan in Australia. According to ExxonMobil, the company has completed an evaluation of its current and future project work in Australia and is seeking employees to voluntarily exit the company. But ExxonMobil did not say what proportion of employees it would seek to reduce, saying only that in Australia all employees who expressed an interest in voluntary redundancy would be considered.
Seeking changes and entering new energy
Faced with the narrowing of the demand side, various Big oil majors have begun to reassess their positioning. Shell CEO Van Beurden said Shell is looking for ways to reposition itself to achieve the energy transition as quickly as possible.
On the road to energy transformation, the new energy field has become the focus of major oil companies. On August 5, BP announced a new ten-year strategy, which plans to transform from an international oil company focused on producing resources to an integrated energy company. Over the next decade, BP will significantly increase its low-carbon energy business and focus on reducing the oil, gas and refining operations in its business portfolio. The core content of BP’s new strategy is to increase low-carbon investment and reduce oil and gas production.
In accordance with the new strategy, BP will not seek to explore in the future in countries where it has not yet carried out upstream activities. In the next ten years, upstream oil and natural gas production is planned to decrease from 2.6 million barrels of oil equivalent/day in 2019 to approximately 1.5 million barrels of oil equivalent/day; refinery capacity will drop from 1.7 million barrels/day in 2019 to 1.2 million barrels /day or so.
In the field of low-carbon energy, BP plans to continue to increase investment. It is reported that BP plans to increase its annual investment in low-carbon energy from approximately US$500 million to approximately US$5 billion; the installed capacity of renewable energy power generation will increase from 2.5GW in 2019 to approximately 50GW; and the daily output of bioenergy will increase from 22,000 barrels. increase to��100,000 barrels; the share of hydrogen energy business in the core market has increased to 10%; the number of electric vehicle charging piles has increased from 7,500 to more than 70,000.
In May, Total also announced its commitment to achieving net-zero emissions by 2050. Driven by this goal, Total is implementing its strategy to develop the Group into a major energy company with integrated oil and gas, low-carbon power and carbon-neutral solutions businesses.
By 2025, Total’s renewable energy power generation capacity target is 25GW. Total stated that its current capital expenditure on low-carbon power accounts for more than 10%. In order to actively promote energy transformation, Total will further increase its capital expenditure on low-carbon power and increase its proportion to 20% by 2030 or earlier. 20%. It will continue to expand its business and become the world’s leading renewable energy company.
Domestic “two barrels of oil” are also actively seeking changes
In March 2020, at the Sinopec 2019 annual results conference , Zhang Yuzhuo proposed to focus on building a “one base, two wings and three new” development pattern with energy resources as the foundation, clean energy and synthetic materials as the two wings, and new energy, new economy, and new fields as important growth points. Driven by the new development pattern, Sinopec announced on August 21 that it would invest in Fengyang Silicon Valley Intelligent Co., Ltd. to lay out the ultra-thin photovoltaic and photoelectric display special glass industry chain. In addition, relying on the resources of its more than 38,000 gas stations and the upstream and downstream resources of petroleum refining, Sinopec is also actively developing a hydrogen energy industry chain.
In this regard, Zhang Yuzhuo said that the development prospects of hydrogen energy are very bright, but how to choose the development direction of the hydrogen energy industry, how to optimize the development path, and how to grasp the development opportunities require in-depth research and exploration and practice. Sinopec will continue to increase investment in hydrogen energy.
China Petroleum has also started its attempts in the field of new energy. On August 5, PetroChina, Shenergy (Group) Co., Ltd., and Shanghai Lingang New City Investment and Construction Co., Ltd. established a joint venture company, Shanghai PetroChina Shenergy Hydrogen Technology Co., Ltd. (hereinafter referred to as “China Petroleum Shenergy”).
Giants have cut expenditures to survive
According to statistics, nearly 200 oil companies have cut investments so far this year, and almost all oil companies have cut their investments. Giants have announced layoff plans. Cutting expenditures has also become the only choice for giants to tide over difficulties.
Sinopec stated that in the second half of the year, it will dynamically optimize and adjust investment projects based on market changes. It is expected that the full-year capital expenditure will be reduced by about 10% compared with the plan at the beginning of the year. PetroChina expects full-year capital expenditures in 2020 to decrease by 23.0% compared with 2019. CNOOC will also lower its full-year capital expenditure by about 11%, and this adjustment will mainly target overseas investments.
In fact, until the fourth quarter of last year, global oil demand was rising. If the epidemic passes, as the economy recovers and travel increases, demand for oil will still increase. </p
