COVID-19 & Crashing Oil Prices... ExxonMobil, others grabbing up emergency storage

COVID-19 & Crashing Oil Prices… ExxonMobil, others grabbing up emergency storage

May 01, 2020 News

As the Novel Coronavirus (COVID-19) continues to desecrate oil demand, the world’s leading exploration and production giants are left with no choice but to hold on to their crude for a little while longer. But there is only so much that they can hold during this period of hibernation. Industry analysts have long predicted that they will soon run tight on storage space for the surplus that keeps on accumulating.
It therefore comes as no surprise to many market observers that the likes of ExxonMobil and many others are grabbing up emergency storage space. This was reported yesterday by Reuters which also disclosed that oil majors such as Chevron and Alon USA Inc. have agreed to rent space to store 23 million barrels of crude in the U.S. emergency oil reserve.
This move by ExxonMobil would be seen as essential since it continues to keep the taps running in key projects like the Stabroek Block. University of Houston Instructor, Tom Mitro had told Kaieteur News in an exclusive interview that despite market conditions, Guyana must continue pumping oil while noting that it makes less economic sense to do otherwise. Mitro had said that companies usually have contractual obligations to pay subcontractors and to defer same would result in the company having to pay penalties and de-mobilization costs as per their contracts.
Mitro was keen to note however that the Government of Guyana will need to pay extra attention to the reported transfer price during this period of uncertainty.

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