KUWAIT: Oil companies’ budgets and exploration and production activities shrank by 30 percent in 2020 in contrast to 2019, due to repercussions of the novel coronavirus (COVID-19), according to an authoritative expert. Turki Hamash, expert of petroleum, exploration and production at the Organization of Arab Petroleum Exporting Countries (OAPEC), said during a virtual seminar, organized by the Kuwaiti Ministry of Oil yesterday, that the value of investments, exploration and production was estimated at $382 billion in 2020. He predicted that expenditures would restore the pre-pandemic level, $530 billion, after the oil price hit $65 per barrel.

On the link between oil prices and volume of explorations, he indicated that this theory remained controversial, also noting that the drop of prices would require some time to detect any impact on explorations. Prices’ decline is usually accompanied by higher hazards, thus prospected returns turn less, Hamash noted, adding in such situations, international companies slash exploration budgets and shift work to regions of less dangers and costs. Patterns of crude oil’s demand and supply had drastically dropped since start of 2020 until the end of May 2021 — amid the coronavirus crisis– along with major drop of consumption, much deeper than the output proportions.

The situation was also marked with rise of crude reserves. Oil markets witnessed rise in proportions of consumption and pricing in June 2020, coinciding with easing of coronavirus-related travel constraints in addition to slashing the oil output by the OPEC+ alliance and decline of the production in the US. On the impact of the virus crisis and drop of shale oil prices, Hamash said that the US output of the crude oil fell by some one million barrels per day — including 330,000 barrels of shale oil — settling at seven million bpd. – KUNA