Oil & Energy
Major Oil Firms To Record Strong Earnings
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
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Oil & Energy
Delta Targets 120MW Power Boost, Moves To Cut Reliance On National Grid
The State Commissioner for Works (Rural Roads) and Public Information, Charles Aniagwu, disclosed this at a press conference in Asaba, weekend, noting that the initiative was part of wider reforms aimed at opening up the power sector to private investors.
Aniagwu, who was accompanied by the Executive Assistant to the Governor on New Media, Felix Ofou, said the state was exploring alternative sources of electricity to support businesses, households and communities while reducing pressure on the national grid.
He said the government was particularly interested in exploiting Delta’s abundant natural gas resources for power generation, pointing to the Kwale Free Trade Zone, which is part of the state’s special economic zone, as a major opportunity for investors.
According to him, prospective investors were taken to the zone during the state’s recent economic summit to enable them to assess the availability of gas as a key raw material for electricity generation. ComparePower Rates
The commissioner explained that generating more electricity locally would not only increase supply in Delta but also free up power on the national grid for use by other consumers.
Aniagwu cited the 8.5MW Independent Power Plant located behind the state secretariat in Asaba as an example of what could be achieved through alternative power sources.
He said the facility had enabled the secretariat complex to operate independently of the national grid, thereby making the electricity that would otherwise have been consumed there available to other users.
He added that the planned 120MW partnership with Supply Power would further strengthen the state’s electricity supply capacity and provide a more reliable power base for small and medium-sized enterprises.
Aniagwu said the state government was also intervening in areas traditionally regarded as the responsibility of electricity distribution companies because inadequate power supply could no longer be allowed to constrain economic development. LearnQuantum Physics
He identified the extension of the electricity grid from Abraka towards the Ndokwa axis as one of the interventions being undertaken to connect more communities to electricity.
The commissioner, however, raised concerns over the burden placed on communities that are often required to provide transformers and other electricity infrastructure, only for distribution companies to take over the facilities and subsequently collect electricity bills without adequately accounting for the investments made by the communities.
He said the state would continue to support efforts aimed at energising communities, noting that improved electricity supply would stimulate businesses, create jobs and help tackle social problems associated with unemployment and idleness.
On regulation, Aniagwu said the government was working with the Ministry of Energy and a committee set up to develop an appropriate regulatory framework for the state’s emerging power sector. SwitchEnergy Plans
He said the proposed energy commission would be responsible for regulating new electricity producers, determining appropriate tariffs and overseeing distribution networks.
The commissioner stressed that liberalising the sector required effective regulation to protect consumers and investors, adding that decisions on power distribution infrastructure, including the use of overhead or underground lines, must take into account the peculiarities and safety requirements of each location.
He warned that power expansion without adequate regulation could expose residents to electrocution and other hazards, stressing the need to protect electricity infrastructure while ensuring consumers were not subjected to unfair pricing.
Aniagwu said the state government’s broader objective was to build an efficient and sustainable electricity market driven by private investment and capable of powering businesses, households and communities across Delta State.
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