The oil and gas industry faces a $1.8 trillion loss in 2020

Oil and gas exploration and production companies are set to be the hardest hit of any sector in 2020, with Fitch Ratings estimating a $1.8 trillion loss by the end of the year.

“The critical and expensive nature of oil and gas extraction (in terms of revenue, opex and capex) means that this sector dominates our lost-revenue projections, accounting for $1.8 trillion of lost revenue globally in 2020. This is six times greater than the impact on the more visibly affected retail sector,” Fitch Ratings noted.  

Globally, the COVID-19 pandemic is set to destroy as much as $5 trillion in revenue for corporates which Fitch tracks in all sectors, the rating agency said.

“The oil and gas sector accounts for the most revenue destruction in dollar terms, representing 40 percent of the aggregate revenue fall,” according to Fitch Ratings.

“While the oil price has recovered from historic lows, pricing is still well inside our price-deck estimates and we expect economic sentiment to remain subdued after the initial post-lockdown euphoria dissipates,’’ the agency added.

Oil and gas exploration and production (E&P) companies around the world are set to see their total annual revenues plunge by a whopping $1 trillion this year, due to the coronavirus pandemic and its effect on global oil demand and prices, Rystad Energy said in an analysis at the end of April.

E&P revenues are set to plummet by around $1 trillion in 2020, a drop of 40 percent, and stand at just to $1.47 trillion this year, compared to last year’s combined annual revenues of $2.47 trillion, according to the independent energy research firm.  

Before the pandemic, Rystad Energy was forecasting annual E&P revenues at $2.35 trillion this year and $2.52 trillion in 2021.

This article was originally published on Oilprice.com