Majors Write Off $69bn in Year To Forget

8 Jan 2021 Issue: 64 / 1 By: James Cockayne

Oil majors will be relieved to turn the page on 2020 and its collective $69bn of write-offs. With capital budgets trimmed to the core, 2021 should see a return to profit as long as crude remains near or above $50/B. Despite divergent energy transition strategies, US shale remains a key theme.

Last year was one to forget for oil supermajors, smaller IOCs and key producing countries alike. As the Covid-19 pandemic sent oil demand and prices into a tailspin from March the five supermajors were quick to react, taking an ax to their capex plans (MEES, 10 April).

But it’s not just planned spending that saw massive cuts. As 2020 wore on and expectations of lower-for-longer oil demand (and prices) grew, this coalesced with the growing investor sentiment that the viability of future projects be radically reassessed in the light of expectations of an accelerated energy transition. BP’s view that 2019’s global oil demand of 100mn b/d may have marked the peak (MEES, 18 September) remains a minority position, but no longer such an outlandish one. (CONTINUED - 3015 WORDS)