The impact of the Covid-19 crisis on economic activity and, therefore, on energy demand, has dealt a severe blow to the big oil companies, which have gone from controlling a traditionally billion dollar business to register losses also billions in 2020. In the case of the European, the British BP Y Shell and the french Total they have together lost 40,857 million in 2020, which contrasts with the benefits of 25,824 million obtained the previous year. The norway Equinor, which presented results this Wednesday, recorded losses of 4,544 million euros in 2020. Added to the Norwegian, the accumulated losses by European oil companies exceed 45,000 million euros. Next week the other two major European oil companies will present results: the Spanish Repsol, and the Italian Eni.
And it is that, 2020 will mark a before and after in a oil industry that is in the process of transformation to adapt to the green transition that is coming in the post-covid stage. The impact of the virus has caused a situation of collapse in the sector, which has seen the take-off of renewables accelerate, in addition to the promotion of regulations to reduce CO2 emissions and measures to restrict mobility for most of the time. of the year due to the spread of the virus. All of this has caused a sharp drop in the price of crude oil, which set record lows, trading negatively for the first time in history, last April.
Due to these new circumstances, companies have had to review the valuation of your assets to adjust them to the market price, which has caused millionaire damage. In that sense, the French giant Total yesterday reported red numbers for 5,982 million euros in 2020 due to low oil prices, which led the company to assume an adverse impact of 8,261 million euros due to the impairment of Canadian assets in the oil sands segment.
For its part, Shell recorded attributable losses of 18,048 million euros. The oil company indicated that, compared to 2019, total production fell due to the impact of divestments, high maintenance expenses and also due to the passage of hurricanes that affected activities in the Gulf of Mexico.
BPDespite achieving an attributable net profit of 1,125 million euros in the fourth quarter of the year, it closed the year with a red figure of 16,824 million.
Although Eni will present results on February 19, it has already registered losses of 501 million in the first nine months of the year.
Repsol, which will communicate its annual results to the market on the 18th, is the only major European oil company that could save the year from the pandemic. According to the consensus of Bloomberg analysts and other experts, the company chaired by Antonio Brufau can obtain a profit of 315 million euros and income of 30,660 million (-37%). In 2019, Repsol already made adjustments to its highest issuance assets for a value of 4,800 million euros, causing a negative net result of 3,816 million.
Norway’s Equinor loses 4,544 million
The Norwegian energy group Equinor presented this Wednesday a net loss of 5,496 million dollars (4,544 million euros) in 2020 due to the effects of the coronavirus pandemic and low oil and gas prices. The former Statoil, which changed its name three years ago, had made $ 1.85 billion (1.53 billion euros) in 2019.
The operating loss was 3,423 million dollars (2,830 million euros), when in 2019 a profit of 9,299 million dollars (7,688 million euros) had been registered. Revenues amounted to 45,753 million dollars (37,828 million euros), 27% less year-on-year.
Equinor, whose main shareholder is the Norwegian state, produced 2.07 million barrels of oil equivalents per day, an amount almost identical to that of a year ago. Free cash flow was $ 85 million (€ 70 million), thanks, among other factors, to a drop in tax payments and lower capital spending.
In the fourth quarter, Equinor lost $ 2,416 million (1,998 million euros) net, ten times more, due to the crisis, the low price of oil and gas and the deterioration of assets in several projects.
“Our result was influenced by the turbulence in the market, but with a solid improvement in costs and capital discipline we presented a positive cash flow for the quarter and for the whole year,” the CEO of the Norwegian group, Anders, said on the balance sheet. Opedal, reports Efe. Equinor expects production to increase 2% in 2021 from the previous year.
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Renewable business
In fact, Repsol is one of the oil companies that has anticipated the energy transition and has already designed its roadmap to transform the company with investments of 18.3 billion until 2025, in which it has also reorganized its structure in four areas to strengthen its business of low-emission generation. In fact, it expects to have a generation capacity that will reach 7.5 GW in 2025 and 15 GW in 2030. The company has been developing projects, especially offshore wind and hydrogen, and leads a consortium to build the first plant for 100 MW alkaline electrolyzers in Europe.
For their part, Total and BP have also embarked on the diversification of their business in renewable energy projects. This Monday, the two British oil companies were the big winners in the last contest for rights over the seabed in the United Kingdom. Total acquired 1,500 MW to develop with Green Investment, and BP won 3,000 MW in consortium with EnBW.
Price collapse in 2020
The lower production and the collapse in the price of a barrel of crude oil caused a collapse in the stock market of the oil companies, some of them with falls of more than 40%. In this way, Repsol shares lost 39.9% in 2020, going from 12.8 euros per share in the first trading session of the year to 8.25 euros per share in the last session. Italy’s Eni experienced a similar trend, with an annual drop of 38.88%. On the other hand, the British BP (-47.02%) and Shell (-44.97%) registered the biggest losses on the stock market. Total was the company that sold the least on the stock market and even so its shares dropped 29.14% to 35.3 euros per share in 2020.
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