Oil price war could slow ExxonMobil’s projects - Charles Ramson Jr.

Oil price war could slow ExxonMobil’s projects – Charles Ramson Jr.

Mar 12, 2020 News

By Kiana Wilburg

In light of the oil price war between Saudi Arabia and Russia, American oil giant ExxonMobil, which has sold off some of its global assets to focus on operations in Guyana, will now have to determine if still wants to aggressively pursue development projects says Attorney-at-Law, Charles Ramson Jr.
During an interview with Kaieteur News, Ramson reminded that oil prices have plummeted by more than 20 percent due to the war between two of the world’s largest oil producers, and compounding the crisis is the fact that the Coronavirus has been deemed a pandemic by the World Health Organization.
Further to this, Ramson reminded that ExxonMobil has the Liza Phase One Project which is producing since December 20, last. Then there is the Liza Phase Two project which it is working on while awaiting approval to go ahead with the development of the Payara project which is expected to produce 220,000 barrels of oil at peak.
In addition to this, ExxonMobil has issued an application for approval from the Environmental Protection Agency (EPA) for a fourth project called Hammerhead. If approval is granted in the timeframe the Operator is hopeful for, Exxon can start producing close to 190,000 barrels of heavy oil from the Stabroek Block.
Ramson said that when one considers the magnitude of the projects, if the price of oil continues to remain low, then ExxonMobil would have to reassess how quickly it would want to move forward in such an environment.
Ramson’s views would also be in line with those raised by Wood Mackenzie analysts. They had said that if the oil price continues to average below US$40 a barrel, then oil majors would have to do significant budget cuts, while noting that the industry would be forced to do deep restructuring.
“But they will be paying attention to this because you live and die by the prices…,” the Consultant added.
OIL CRISIS
The crisis in the oil market is due to two interrelated factors—fears over the coronavirus and a brewing oil price war between Russia and Saudi Arabia.
Just a few days ago, oil prices saw the most dramatic decline since the financial crisis in 2008. Because of the coronavirus, oil prices which were as high as US$69 a barrel in early January declined to about US$50-US$45 a barrel. That state of affairs would only get worse following a row that could become an ugly oil price war between Russia and Saudi Arabia.
According to CNN Business, Russia refused a proposal that was made last Friday at a meeting in Vienna by the Organization of the Petroleum Exporting Countries (OPEC) to cut back on the production of oil supply in an attempt to support prices which have been declining due to fears over the coronavirus.
In response to Russia’s refusal, Saudi Arabia over the weekend slashed its selling price for crude by US$6 to US$8 in an effort to retake market share and heap pressure on Russia. Upon review of the foregoing, international analysts commented that Saudi Arabia is “rolling up its sleeves for a price war.”
The net effect of Saudi’s actions led to prices dropping to US$34 a barrel.
CNN Business also reported that the shock to oil also rattled stock markets, which were already in a panic because of the novel coronavirus outbreak. The news agency noted that markets in Asia plunged during Monday trading, while US stocks recorded massive declines. In Europe, stocks plunged by 8.5%, while Germany’s was down 7.4% and Italy’s by 7%.
It was also noted that energy stocks were clobbered. ExxonMobil (XOM) and Chevron (CVX) plunged more than 9% apiece, and BP (BP) tumbled 20%. Exploration and production companies suffered even steeper losses: Pioneer Natural Resources (PXD) plummeted more than 30%, while Occidental Petroleum (OXY) lost 40%. (See link for more details: https://edition.cnn.com/2020/03/08/investing/oil-prices-crash-opec-russia-saudi-arabia/index.html).
With the oil price war unraveling before the world, US Investment Bank and Financial Services Company, Goldman Sachs said that oil prices dropping by 43 percent to US$20 a barrel is a real possibility that the market should brace itself for.
S&P Global Platts, the leading independent provider of benchmark prices and analytics for the energy and commodities markets for over 100 years, also noted that oil majors will be under considerable pressure to slash their investment plans and cut shareholder payouts this year in light of tumbling prices.

Latest News

Oil price war could slow ExxonMobil’s projects – Charles Ramson Jr.

Related

Similar Articles

The Glenn Lall Show|| February, 14th, 2025

Follow on Tik Tok @Glennlall

THE BLUNT OF THE DAY

Sports

The Battle for Barbados: One Guyana Racing Stable faces off against...

Tyrrell breaks 12-year-old school record to claim...

Raja Pooran inspires Everest Masters to victory...

BCB saddened at the passing of the late Lennox...

Berbice Cricket Board names 15-man squad to...

Slingerz FC shines at Guyana Energy Conference...

Features/Columnists

Crowds, chaos and complaints

Why the U.S. Should Strengthen Trade Ties with the Caribbean

Guyanese leaders better learn from Ukraine

Publisher’s Note

Weekend Cartoon

Bridge Watch

Demerara Harbour Bridge

> Berbice Bridge […]

Oil price war could slow ExxonMobil’s projects – Charles Ramson Jr.

Share this:

Related

Similar Articles

The Glenn Lall Show|| February, 14th, 2025

Follow on Tik Tok @Glennlall

THE BLUNT OF THE DAY

Sports

Features/Columnists

Publisher’s Note

Weekend Cartoon

Bridge Watch

Demerara Harbour Bridge

> Berbice Bridge […]