The impact of the financial crisis on the oil industry

Zhou Yu, director of the Trade Coordination Office of the China Petroleum and Chemical Industry Association, pointed out that international raw material prices fluctuated at a high level, catching companies off guard. Take imported sulfur as an example. In June last year, the price was 800 yuan per ton. In April this year, it rose to 6,000 yuan per ton, an increase of 600% to 700%. However, the international sulfur price fell sharply afterwards, and is now back to around 800 yuan per ton. But why is there still no one buying our company’s sulfur? ? Why are you importing it? You can just buy it from us.

Oil and financial markets have always been closely related. The financial market has encountered a cold winter, and the oil market has also felt the biting chill. OPEC said in its production reduction statement on the 24th that the financial crisis is having a significant negative impact on the global economy. The economic downturn has suppressed global crude oil demand and aggravated the supply and demand imbalance in the crude oil market. In its October monthly report on the international oil market, the International Energy Agency predicted that the average daily demand for global crude oil will be 86.5 million barrels and 87.2 million barrels this year and next, 240,000 barrels and 440,000 barrels lower than expected last month. The crude oil demand of OECD member countries will decrease by 2.2% and 1.3% respectively this year and next. Weak demand is also reflected in changes in imports from major oil consumers. According to official U.S. statistics, as the world's largest oil consumer, the United States' oil imports in September averaged 8.62 million barrels per day, a decrease of 13.5% from August and an even greater 16.4% decrease compared with the same period last year. In the first three quarters of this year, the United States imported an average of 9.72 million barrels of crude oil per day, a year-on-year decrease of 3.6%. In addition, Japan's average daily crude oil imports in August were 4.13 million barrels, a decrease of 4.1% from the previous month and a decrease of 0.3% compared with the same period last year. The continued rise in crude oil inventories in major developed economies around the world also confirms the sluggish demand. The latest report from the U.S. Department of Energy showed that U.S. commercial crude oil inventories increased by 3.2 million barrels in the week ended October 17, marking the fourth consecutive week of increases. According to OPEC data, as of September, the 15 EU countries (excluding Central and Eastern Europe) * * ) plus Norway’s crude oil inventories have exceeded the average inventory level in the past five years for six consecutive months. Japan's crude oil and refined oil inventories rose for the fourth consecutive month in September, and exceeded the 200 million barrel mark for the first time since January 2007. Financing difficulties The financial crisis not only suppresses oil demand by affecting economic growth, but also puts huge financial pressure on oil production. Richard Jones, executive vice president of the International Energy Agency, said recently that before the outbreak of the global financial crisis, many upstream exploration projects in the oil industry were delayed due to financing reasons. The outbreak of the financial crisis has exacerbated this problem, especially because many smaller oil companies are in crisis due to lack of liquidity. A recent report by the International Energy Agency also pointed out that although most multinational oil companies can withstand the impact of the financial crisis, some companies with higher leverage ratios * * (such as Russia, Caspian Sea * * ), oil investment is being affected. Gazprom said this week that the current liquidity crisis could affect its ability to refinance debt and future cash flow expectations. The company also said it may cancel the share purchase agreement it reached with TNK-BP last year. According to the agreement, Gazprom will invest US$700 million to US$900 million to purchase the latter's shares in the Kovykta natural gas field. BP announced that it would temporarily shelve its plan to build a liquefied natural gas facility in Delaware, US, worth approximately US$500 million, on the grounds that "market conditions do not support such a project in the short term." Nigeria, a major oil-producing country in Africa, also faces the same financial pressure. Nigeria * * Oil companies had previously planned to invest US$60 billion in oil development projects from 2008 to 2012, more than half of which required borrowing, which does not seem to be easy in the current financial market, which is heavily reluctant to lend. In addition to financing difficulties, falling oil prices are also dampening the enthusiasm of oil companies for production. TNK - BP plans to reduce capital spending by $1 billion next year. The company's first * Operations Officer Tim Summers said: “When oil is $120 to $140 a barrel, you try to grow the company as fast as possible, but at $70 a barrel, you see it differently. ” Analysts believe that whether OPEC takes the initiative to cut production to protect prices, or oil companies are forced to reduce investment due to financing difficulties, the result will be a shrinking of oil production. Once the world economy emerges from the crisis and begins to recover, the huge oil supply gap will lead to a new round of volatility in the oil market.

In every crisis, some companies are aborted, and some new dynamic companies are born.

The impact on the energy industry is still very large