Yemisi Izuora
The number of jobs gutted from oil and gas companies around the world has now passed the 250,000 mark, with still more to come, according to industry consultant Graves & Co.
“I was surprised it’s gotten this far,” John Graves, whose Houston firm assists in oil and gas deals with audits and due diligence, said Friday in a phone interview.
The industry has idled more than 1,000 rigs and slashed more than $100 billion in spending this year to cope with oil prices that have fallen by more than half since 2014.
Oil services, drilling and supply companies are bearing the brunt of the downturn, having accounted for 79 percent of the layoffs, according to Graves.
U.S. oil producers resumed their pullback on drilling this week, idling 10 rigs in an effort to cut costs and stem the rising tide of crude supplies that’s gutted oil prices to about $40 a barrel.
The cuts extended a five-year low in activity after the two rigs added last week proved to be a short-lived pause in three months of downsizing.
Similarly,PricewaterhouseCoopers observes a fading business in Africa as $50 crude shuts door on high-cost deals.
It said, now, oil below $50 has made more than two out of three investment projects on the continent non-viable.
“Capital markets are effectively closed to the oil and gas industry” in Africa, Tony Hayward, former head of BP and now chairman of Genel Energy, said at a conference in Cape Town in October.
“A decade of exploration, with billions of dollars invested and only limited commercial success.” When six of the 10 biggest global oil discoveries in 2013 were made in Africa, it underlined the potential of the energy riches that had lured companies from Royal Dutch Shell to Exxon Mobil Corp.
Governments have been slow to react as the slump in crude makes the royalties charged from Libya to Angola look punitive. African production, already 19% below its 2008 peak of 10.2mn bpd, is set to drop for a third year.
While final investment decisions have been made on less than 10% of the 48bn barrels of oil equivalent discovered in the past decade, governments haven’t adapted to the new environment, Martin Kelly, director for sub-Saharan Africa research at consultancy Wood Mackenzie, said in an interview at the Africa Oil Week conference.
This therefore means that some nations including Nigeria, the continent’s biggest producer, are proposing increasing royalties at a moment the industry can least bear it.
“There is a raft of changes working their way through various parliaments around Africa at the moment and they’ve been primarily based on prices that were $100,” Kelly said.