Confinement exponentially reduced fuel use during the pandemic, which in turn impacted oil production. Some managed to get through the difficult year .
Most of the companies that belong to the oil industry had to face large losses, although some were able to overcome the difficulties and present a positive balance. Photo: Pexels
LatinAmerican Post | Moisés Campos
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Leer en español: ¿Por qué algunas petroleras registraron ganancias en pleno 2020?
2020 was one of the most complicated for the oil industry that it has had to face. Not only did he have to deal with the consequences of the different tensions that arose in the geopolitical sector, but also with the drop that occurred in the demand for crude worldwide, due to the COVID-19 pandemic.
Most of the companies that belong to the oil industry had to face large losses, although some were able to overcome the difficulties and present a positive balance. The industry has started 2021 with a panorama full of uncertainties, due to the macroeconomic consequences that can negatively impact the demand for oil and its derivatives.
Reasons for the negative balance in the oil industry
- One of the reasons was the lack of agreement in 2020 on production between Russia and the OPEC countries, which led to a price war. This is expected to change by 2021.
- The containment measures established by most countries to deal with the pandemic seriously affected oil demand. Daily demand fell to 30 million barrels, even with the reduction in production agreed by the oil countries.
- The oil industry had already started a transformation process, to adapt to environmental demands, which could also have negatively affected its performance,
- In addition to this, there are the climatic and natural factors that affected some oil regions.
Oil companies that had losses in 2021
A large part of the large oil companies worldwide experienced heavy losses, as noted by the DW portal:
- Shell: The company indicated in a statement sent to the London Stock Exchange that its revenues in 2020 were in the order of 180,543 million dollars, which represents a drop of 47.6% compared to 2019, produced especially by the fall in oil prices. This represented about 21 billion losses in the year.
In addition, he also pointed out as a cause of this drop, the divestments carried out and the high costs of maintaining the infrastructure. Similarly, production was also affected by the hurricanes, which mainly affected the company's activities in the Gulf of Mexico.
- Total: This company also had a negative result in 2020, with losses of 5,982 million euros, these results motivated by low oil prices.
- Equinor: The loss for this Norwegian group in 2020 was 5,496 million dollars (4,544 million euros). This result was due to the effects caused by the COVID-19 pandemic and also by low oil prices. In 2019 the company earned 1,851 million dollars (1,530 million euros).
Oil companies with-profits
Ecopetrol is an example of how, despite adverse situations, some companies managed to present profits in 2020. The president of the company, Felipe Bayón Pardo, pointed out in an article by the firm Valora Analitik, published on its web portal, that the results obtained were similar to those of the first quarter of 2020, before the pandemic.
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This was due to the recovery of Brent prices, a higher volume of crude oil and fuel sales, which was related to the lifting of containment measures that caused an increase in national demand and higher consumption of fuel due to the gradual reestablishment of economic activity, said the president of the oil company.
@ECOPETROL_SA registró resultados positivos en 2020, con utilidades netas de $1,7 billones (unos US$500 millones), muy diferente a panorama del sector en el mundo. Gráfica @ValoraAnalitik. #NoOlvidemosQue es bueno para Colombia y 17 millones de colombianos en fondos de pensiones pic.twitter.com/YjIXMDMaal— Mauricio Téllez (@Mauriciotellez) February 23, 2021
But there is an extra factor, according to Portfolio : the diversification of activities, especially activities related to the transportation sector, which obtained results in accordance with the company's expectations, by transporting 1,017,000 barrels per day.
For its part, Repsol, like all oil companies, also had millions in losses due to the crisis caused by COVID-19, closing 2020 with a negative result of 3,289 million euros. But, in the adjusted net balance, the company obtained profits of 600 million euros, which reduced the negative balance, as indicated by the newspaper El País Economía.