The Eight Chemical Giants Couldn'T Bear To Cut Their Spending To Make Ends Meet

In the first half of this year, under the double attack of the collapse of international oil price and the spread of the global new crown epidemic, all oil and gas giants performed poorly, becoming one of the industries most affected by external factors.

Huge losses, layoffs, business sales, bankruptcy, heavy business performance surrounded the entire oil and gas sector. The "three barrels of oil" in China, as well as the five major international oil giants such as shell, BP (British Petroleum), ExxonMobil, total and Chevron, are all under the pressure of a sharp decline in business performance compared with last year. In the first half of this year, the eight global oil giants accumulated losses of more than 340 billion yuan, and ExxonMobil even set the worst performance record in more than 100 years.

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Most of the eight giants lost 10 billion yuan

On August 30, with the release of Sinopec's 2020 semi annual report, all the mid year report cards of "three barrels of oil" were disclosed. Among them, Sinopec and PetroChina had a total net loss of more than 52.8 billion yuan, and CNOOC realized a net profit of 10.38 billion yuan, a year-on-year decrease of 65.7%.

Royal Dutch Shell, BP, ExxonMobil, total, Chevron and ConocoPhillips have all reported second quarter results. According to statistics, the total loss of the six multinational oil companies in the second quarter reached 53.693 billion US dollars (about 374.8 billion yuan).

Specifically, shell's second quarter report data showed a net loss of $18.13 billion, including $16.8 billion in write downs. The adjusted profit was $638 million, compared with $3.5 billion in the same period last year. BP reported a net loss of $21.213 billion, according to its second quarter report. In terms of the amount of losses, the company ranked first among the eight oil giants, thus the company's debt reached its highest point since 2015. Therefore, BP revised down the long-term oil price forecast and wrote down the asset values of several projects.

ExxonMobil lost $1.1 billion in the second quarter, its worst performance since the Second World War. In terms of revenue, ExxonMobil's second quarter revenue was $32.6 billion, down 52.8% from a year earlier. Total and Chevron are rare oil giants that can make profits in the first quarter of this year, but they still suffered large losses in the second quarter.

Among them, total's net profit in the first quarter was 1.78 billion US dollars, a year-on-year decrease of 35%; the net loss in the second quarter was 8.37 billion US dollars, with a total net loss of 6.6 billion US dollars in the first half of the year. In the first quarter, Chevron achieved a profit of US $3.6 billion, an increase of 36% over the same period last year; in the second quarter, it suffered a Waterloo, and recorded a net loss of $4.53 billion in the first half of the year, showing the lowest profit level in more than 30 years.

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Oil giants see layoffs again

Shell began to take the initiative of "voluntary resignation + compensation" in May. In addition, shell will significantly reduce the scale of external recruitment; re-examine the contract of expatriate staff to save money. In the future, there may be further layoffs and redesigning the organizational structure of the enterprise.

More than two months ago, when chevron announced 10% - 15% layoffs, ExxonMobil stressed at its annual shareholders' meeting that there were no layoffs at present. But after more than two months, everything changed. A spokesman for Exxon said on February that the company was evaluating the possible layoffs of the company worldwide.

On the same day, ExxonMobil announced a voluntary redundancy plan in Australia. According to ExxonMobil, the company has completed the assessment of its current and future project work in Australia, and is seeking voluntary exit from the company. But ExxonMobil did not say what percentage of employees it sought to cut, saying only that in Australia it would consider all employees who expressed interest in voluntary redundancy.

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Seeking change and marching into new energy

Facing the narrowing of demand side, the major oil giants have begun to re evaluate their own positioning. Shell's chief executive, Mr van burden, said shell was looking for ways to reposition itself to achieve energy transformation as soon as possible.

On the road of energy transformation, the field of new energy has become the focus of attention of major oil companies. On August 5th, BP announced its new 10-year strategy, which plans to transform from an international oil company focusing on production resources into an integrated energy company. Over the next decade, BP will significantly increase its low-carbon energy business, focusing on reducing oil, gas and refining operations in its portfolio. The core content of BP's new strategy is to increase low-carbon investment and reduce oil and gas production.

Under the new strategy, BP will not seek to explore in countries where it has not yet carried out upstream activities. In the next decade, upstream oil and gas production is planned to be reduced from 2.6 million BOE / D in 2019 to about 1.5 million BOE / D; refinery capacity will be reduced from 1.7 million B / D in 2019 to about 1.2 million B / d.

In the field of low-carbon energy, BP plans to continue to increase investment. It is reported that BP plans to increase its annual investment in low-carbon energy from about US $500 million to US $5 billion; the installed capacity of renewable energy power generation will increase from 2.5gw in 2019 to about 50gw; the daily output of bioenergy will increase from 22000 barrels to at least 100000 barrels; the share of hydrogen energy business in the core market will increase to 10%; and the number of electric vehicle charging piles will increase from 7500 to more than 70000.

In May, total also announced its commitment to achieving net zero emissions by 2050. Driven by this goal, total is implementing the strategy of developing the group into a large energy company integrating oil and gas, low carbon power and carbon neutral solutions.

By 2025, total's renewable energy installed capacity is targeted at 25gw. Total said it would increase its capital expenditure on electricity by more than 20% before 2030, or increase its capital expenditure on electricity by more than 10% before 2030. It will continue to expand its business to become the world's leading renewable energy company.

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Domestic "two barrels of oil" is also actively seeking change

In March 2020, at the annual performance conference of Sinopec in 2019, Zhang Yuzhuo proposed to build a "one base, two wings and three new" development pattern based on energy resources, with clean energy and synthetic materials as two wings, and new energy, new economy and new fields as important growth points. Driven by the new development pattern, Sinopec announced its investment in Fengyang Silicon Valley intelligent Co., Ltd. on August 21, laying out the industrial chain of ultra-thin photovoltaic and photoelectric display special glass. In addition, relying on the resources of more than 38000 gas stations and upstream and downstream resources of petroleum refining and petrochemical, Sinopec is also actively laying out the hydrogen energy industry chain.

In this regard, Zhang Yuzhuo said that the development prospect of hydrogen energy is very bright, but how to choose the development direction of hydrogen energy industry, how to optimize the development path, and how to grasp the development opportunity need in-depth research and exploration and practice. Sinopec will continue to increase investment in hydrogen energy field.

PetroChina has also started an attempt in the field of new energy. Shanghai Shenneng Xincheng Construction Co., Ltd. (hereinafter referred to as "Shanghai Shenneng Construction Co., Ltd.") is a joint venture between China National Petroleum Corporation Limited (hereinafter referred to as "Shanghai Shenneng Construction Co., Ltd.").

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The giants are cutting back on spending

Statistics show that nearly 200 oil companies have cut their investment so far this year, and almost all the oil giants have announced layoff plans. Cutting spending has also become the only choice for the giants to tide over the difficulties.

Sinopec said that in the second half of the year, it will dynamically optimize and adjust investment projects according to market changes. It is expected that the annual capital expenditure will be reduced by about 10% compared with the plan at the beginning of the year. PetroChina predicts that the annual capital expenditure in 2020 will decrease by 23.0% compared with that in 2019. CNOOC will also cut its annual capital expenditure by about 11%, which will mainly focus on overseas investment.

In fact, until the fourth quarter of last year, global oil demand was on the rise. If the epidemic is over, as the economy recovers and travel increases, the demand for oil will increase.