Global E+P Revenues to Fall by $1 Trillion

Global E+P Revenues to Fall by $1 Trillion
Global exploration and production revenues will fall by about $1 trillion this year, according to Rystad Energy.

Global exploration and production (E&P) revenues will fall by about $1 trillion this year, according to a new forecast by Rystad Energy.

The drop will see revenues come in at $1.47 trillion and marks a decline of 40 percent from last year’s figure of $2.47 trillion, Rystad highlighted. Before the pandemic, Rystad expected total E&P revenues to reach $2.35 trillion in 2020.

Cash flow is also set to plunge, according to Rystad, which estimates that free cash flow for the E&P sector will shrink to $141 billion. This is one third of what it was last year, Rystad highlighted.

Upstream spending is expected to fall by 25 percent too, from $530 billion in 2019 to $410 billion this year. Rystad outlined that U.S. shale remains the largest contributor to this particular drop, followed by oil sands producers.

The capital expenditure cuts will have a “particularly strong” impact on discoveries and companies’ ability to proceed with final investment decisions on new projects, Rystad warned, adding that this year might be marked by the lowest project sanctioning activity since the 1950s in terms of total sanctioned investments.

Rystad’s latest forecast for oil demand projects a decrease of 10.4 percent for 2020, or 10.3 million barrels per day (bpd) year over year. The company expects April to take the biggest hit, with demand for oil estimated to fall by 26.3 million bpd year on year.

As of April 29, there have been more than three million confirmed cases of Covid-19 globally, with 207,973 deaths, according to the latest information from the World Health Organization (WHO). Europe has been the hardest hit region, with 1.4 million confirmed cases and 129,311 deaths, as of April 29, WHO data shows.

Rystad describes itself as an independent energy research and business intelligence company providing data, tools, analytics and consultancy services to the global energy industry.

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