Reinventing upstream oil and gas operations after the COVID-19 crisis

To come out of the crisis, the sector needs to change how it works.

 
This has been a year of disruption for the oil and gas (O&G) industry—and not in a good way. The members of the Organization of the Petroleum Exporting Countries and others, including Russia (known as “OPEC+”), have found it difficult to create a common outlook on supply. At the same time, the COVID-19 pandemic has cut global demand sharply. In April, the price of Brent crude dipped below $20 a barrel, the lowest since the aftermath of 9/11 in 2001; it has since recovered to above $43/barrel.

Some of these challenges will pass or at least soften. Nevertheless, we think the O&G industry is at an inflection point: to sustain their businesses, operators and service companies alike will need to simplify their portfolios and establish new ways to create value.

Consider: at $25/barrel, conservatively, 2.5 million barrels a day (mbd)—some estimates are much higher—of global production would become uneconomic (Exhibit 1). With this in mind, many operators have cut spending and postponed work. These are on top of actions taken in the previous decade, which reduced unit-cost production by 30 percent.

Συνέχεια ανάγνωσης εδώ

Πηγή: mckinsey