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12 July, 2021

BP: Pandemic overshadowed all energy crises in history

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The coronavirus pandemic in 2020 has eclipsed all previous global crises facing the global energy sector. British oil giant British Petroleum (BP) writes about this in its traditional annual review.

For 70 years - and this is how long the corporation has been preparing such reports - the energy industry has faced a number of dramatic events. Such as, for example, the Suez Crisis in 1956. Or the recent disaster at the Fukushima nuclear power plant in 2011.

“All of these events were great shocks for the global energy sector. But they all pale against the background of last year's events, ”- said the chief economist of the company Spencer Dale. Due to the pandemic, global oil production fell by 6.6 million barrels per day. This marked a record decline in post-war history.

At the beginning of the pandemic - in the spring of 2020 - consumption literally collapsed. In April, demand fell by 20 million barrels per day in relation to the pre-coronavirus level. This was unprecedented in the history of the industry before.

BP believes the impact of coronavirus on energy will be long

In a similar 2020 report, BP revised its long-term oil price forecasts to reflect the coronavirus pandemic. The corporation believes the impact of the coronavirus on the global economy and on oil demand will be long lasting. British Petroleum's long-term outlook for prices dropped to $ 55 a barrel for Brent crude from 2021 to 2050.

The corporation's report noted that the new forecast could affect the change in some of the exploration plans. Among other things, BP will have to cut 10 thousand employees worldwide. But not only because of the consequences of the pandemic, but also in connection with plans for a gradual transition to work with renewable energy sources.

However, BP will lose a little more against the background of the overall picture. As stated in a new report from Fitch Ratings, losses of global oil companies due to the coronavirus pandemic and the related collapse in oil prices will amount to trillions of dollars.

COVID-19 has other implications as well. The pandemic has accelerated Europe's energy transition. By the time the European economy recovers from the downturn, the demand for fuel here will have dropped to such an extent that some refineries will cease to exist. Several businesses have already announced their closure in the coming years or are on the verge of doing so.