The world’s largest oil companies are set to report next month another set of strong quarterly earnings amid significantly higher oil prices and global oil demand in the second quarter compared to the same period last year. Europe’s largest oil firms
Shell (0.19%), BP (0.00%), Total Energies (0.60%), Eni (0.52%), and Repsol (0.52%) had already seen solid earnings for the first quarter as lockdowns eased and oil price rose with a tightening market. For the second quarter, results would be higher, and certainly much higher than for the second quarter of 2020.
Brent Crude prices averaged nearly $65 per barrel in April 2021 and $68.53 in May 2021, with prices in June holding on to above $70 so far. To compare, the average price of Brent was just $18.38 a barrel in April 2020, $29.38 in May, and just over $40 in June 2020.
Out of Europe’s top five oil companies, BP and Total Energies reported Q1 2021 earnings higher than those for Q1 2019 in pre-pandemic times, although revenues at all firms dropped significantly compared to the pre-crisis levels.
Income at Shell, BP, Total Energies, Eni, and Repsol nearly returned to pre-pandemic levels, thanks to dramatically higher oil prices, and further upsides in earnings are on the horizon with this quarter’s oil price rally, data and Analytics Company Global Data said in a new report last Tuesday.
“The group began to see improved financial performance towards the end of 2020, but Q1 2021 was particularly strong compared to recent quarters. We’ll likely see a continuation of strong performances in Q2 as prices remain elevated and capital discipline measures remain in place,” said Daniel Rogers, Senior Oil and Gas Analyst at Global Data.
According to Global Data’s analysis of the firms’ earnings for Q1, net income levels remained robust compared to 2019 levels despite significantly weaker revenues.
Some examples worth noting include not only higher earnings, but also some oil majors increasing returns to shareholders thanks to the rising income.
BP is resuming share buybacks this quarter after more than tripling its first-quarter earnings from a year ago on the back of rising oil prices and “exceptional gas marketing and trading performance.”
Shell reported a surge in adjusted earnings for the first quarter and lifted its dividend by 4 percent as higher oil and gas prices and demand drove profits higher.
Total Energies said its adjusted net income of $3 billion for Q1 exceeded its earnings from the pre-crisis Q1 2019, thanks to higher oil and gas prices and the strategy to grow liquefied natural gas (LNG) and renewable.
This year’s financial performance is in stark contrast with last year’s carnage which saw losses, billions of U.S. dollars of write-downs, and cuts to dividends for some majors. Exxon Mobil (0.22%) even reported four consecutive quarters of losses for all quarters in 2020.
Big Oil booked some of their largest quarterly losses, laid off tens of thousands of workers, and most European majors cut their dividends in Shell’s case, the first cut since World War II.
But this year, thanks to much higher oil prices, earnings started pouring in as early as in the first quarter.
Robust profits are expected for Q2, too, in light of surging cash flows because of higher oil prices and continued strict capital discipline and cost measures.
Refining margins in the downstream businesses, however, remain weak, although not as weak as last year when mobility was severely restricted around the world. Refining margins remain low despite improvements in the first quarter this year, Global Data’s Rogers noted.
Still, the largest international oil companies are set to benefit in 2021 from recovering global oil demand and the rise in oil prices.
Paraskova writes for Oilprice.com
Ex-Lawmaker Volunteers For Petroleum Sector Deregulation
This follows the ex-lawmaker’s faulting of Nigeria losing over N5trilion annually as a result of fuel subsidy.
Bruce, who represented Bayelsa East Senatorial District in the 8th Senate, on his verified Twitter handle, decried what he described as ignorance and ineptitude of government agencies responsible for fuel subsidy.
“We cannot keep losing five trillion naira annually. I am able and willing, and I volunteer myself to lead the team to deregulate our petroleum sector.
“I will execute this flawlessly such that no Nigerian will be on the street protesting.
“The ineptitude and ignorance of the government agencies responsible for this are mind-boggling,” Bruce tweeted.
Stakeholders Urge FG To Shift From Fossil Fuel
This was the conversation at a recent one day capacity building workshop for media and Civil Society Organisations in Nigeria, organised by the Centre for Journalism Innovation and Development, through its Natural Resource and Extractive Programme, in partnership with Natural Resource Governance Institute.
The hybrid workshop, themed, “Oil Dependency in Nigeria: Imagining a Future Beyond Oil”, had over 50 participants, including journalists from the extractive sector, CSOs, and social media influencers in attendance.
The workshop, according to the organisers, was geared towards improving the understanding of oil dependency and the nexus with energy transition to better communicate the impact on Nigeria and the Nigerian economy.
Senior Officer, NRGI, Ms. Tengi George-Ikoli, explained that Nigeria was at a critical point in its development, hence as a fossil fuel-dependent country, it is important that Nigeria develops its own strategy to engage the shifting global focus away from oil.
“Nigeria must develop its own medium to long term strategy to mitigate the likely export and government revenue losses from a shrinking market base as these countries look to reducing oil reliance beyond 2030.
“Nigeria must make strategic decisions in the way it spends its limited revenues, take economic diversification more seriously, leveraging regional and global opportunities beyond oil, and including new frontier possibilities available in the green economy”, she said.
Also, Deputy Director, Development Practice, CJID, Mr. Akintunde Babatunde, said as energy transition persists globally, Nigeria as a monolithic fossil fuel dependent economy has to prepare for what the shift to cleaner energy sources means for its economy.
“Data is pointing us to the fact that Nigeria will likely lose a majority of its foreign exchange earnings and revenues for both the federal and subnational government.
“In fact, it is already happening, because Nigeria is at a critical point in its development process, it is important for professionals to discuss the way forward on how the decisions we make as a country are more important now than ever”, he said.
Earlier, the Acting Executive Director at CJID, Tobi Oluwatola, harped on the need for capacity building for the media and CSOs, noting that they are in the best position to enlighten the public from an informed perspective.
“It is time for Civil Society Organisations, journalists, and policy experts to have this discussion, most especially as Nigeria plans to achieve net zero by 2060. There is a need for CSOs to be empowered with the right skills to be able to do the right advocacy and accountability work in Nigeria”, he stated.
Nigeria To Construct Gas Pipeline To Europe Through Morocco
This follows reports of surging demand for African energy supplies from the EU that is seeking to wean itself of dependence on Russian oil and gas.
“This gas pipeline is to take gas to 15 West African countries and to Europe and through Morocco to Spain and others,” said the Minister of State for Petroleum Resources, Timipre Sylva.
“It is only after the engineering design of the pipeline has been made that we will know exactly (what) the cost of the pipeline will be. When that time comes, we will be talking about funding,” he added.
Nigeria is a member of the Opec group of major oil producers and has huge gas reserves – the largest proven reserves in Africa and the seventh largest globally.
On May 30, Tanzania transported 60,000 tonnes of coal to the Netherlands.
Last month, Botswana’s President, Mokgweetsi Masisi, said European nations had “flooded” his country with requests to supply coal.
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