As the world continues to battle the coronavirus and ensuing diseases like the Black Fungus, the oil and gas industry is also trying to stay afloat. 2021 may pose new challenges for oil drilling companies across the world, but at most, it’ll be a leapfrog year that serves as a stepping stone into the new post-pandemic world.
Who Lost or Won
Even top players such as Halliburton Company, GE (Baker Hughes), Schlumberger Limited, and Weatherford International PLC (EFT) have faced the market headwinds of COVID-19 on their production and sales. But that’s not to say that pandemic has won over one of the largest industries running the world. While there have been speculations about the long-term shift in petroleum consumption, it seems as if we’re still far from that.
Here’s more on the challenges that drillers continue to face and the predictions for coming years.
The oilfield and drilling industry was not as impacted by the pandemic as it was by the predicted drop in petroleum consumption. This was only spurred into action by the economic setback that the world faced in lieu of the viral outbreak. The market demand for oil fell by 25%, but the numbers have improved since then. The losses have slimmed to only 8%, which is a positive sign of recovery but not an improvement from the pre-COVID-19 standards.
Another challenge for the industry is that the energy stocks have underperformed and lost the battle to base metals according to the S&P 500 index since July 200. This loss can largely be attributed to large-scale layoffs and employment cyclicality. About 14% of the workforce in the oilfield industry had to be laid off last year because 70% of the employment avenues had shrunken. A big challenge for the industry is to redeem itself.
Will the market survive the downturn?
Even though this may seem like a tragic economic slump right now but it’s not something unusual. The oil and gas sector has grown robust over the decades and can deal with the highs and lows in each cycle. The next decade will bring some transformative changes in the O&G value chain, owing to the shift in oil-consumption patterns and environmental sustainability. But those changes hope not to be for the worst, and definitely not because of the events of 2020. If at all, the industry might change its direction and set afoot on a new course.
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