The Effects of COVID-19 on Oil and Gas Industry and Responses - Hande Mert

As the COVID-19 continuing it’s spread rapidly around the world, countries are taking more precautions to slow down the spread. The first and actually, the most effective way to slow down the spread of the virus was lockdowns. Even though this still is the best way, the impacts on our economy are undeniable. Therefore with the social distancing guidelines, a big step has been taken towards the new normal. Companies reduced the number of working people, but at least they are back in business. Little by little, the recovery phase started, which is going to take a long time and have serious and lasting impacts.

The continuing rise in COVID-19 cases has tied up with the demand for oil and gas. Because with transport and air travel restrictions, worldwide usage is decreasing. Therefore the physical operations both upstream and downstream are slowing down. As a result, in a short period of time market value of oil and gas has dropped. That is why the industry is taking one of the biggest and hardest hits in over a decade.

World’s biggest oil and gas companies have lost billions of dollars during the pandemic. That is reasonable when the oil refining process stages are considered. With the lack of workers, the maintenance and repairs of drill machines, pumps, refiners, and pipes would be delayed, which is a serious problem for a project to be decided as risky or deferred. So many companies are in huge debt, and the recovery phase is not going to be easy. Even though the ‘’new normal’’ provide workers to go their jobs (with a reduction of the number of workers in a shift), there is still a possibility of a local lockdown, which results in a delay in the production and shipping stages. When we consider the uncertainties of this crisis, these companies should take smart and efficient action.

The recovery phase is an opportunity to learn from previous achievements and mistakes, to make better, technological, and environmentally friendly decisions in the production of oil and gas, especially for reducing the impact on the environment. With the lockdowns and decrease in production, CO2 emissions have dropped. Which is a good head start to investigate new methods to keep the reduction of the CO2 emission after the pandemic is over. Therefore the impact on climate change will be reduced. Even when this problem is compared with the COVID-19 outbreak, it may seem way down the road and does not need and immediate action, but still, for a better future, every possible outcome should be defined before it is too late.

To create a better environment for the industry after the COVID-19 pandemic, logical and long-term decisions should be made. Companies should invest their money in further operations and projects. To get back on their feet economically, they should implement new and more effective strategies to help turn the negative impacts of COVID-19 on their business into a positive trend. New partnerships with other industries such as the mining and automotive industry can help the sustainability of the oil and gas industry. Even the oil and gas will be one of the biggest energy sources in the future as well as right now, renewable energy production projects must be in the plans of the companies. Just like in history, the industry should respond to this crisis, adapt to it, and turn it into an opportunity in a futuristic way.

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