18 Sep 2020
Posted in Oil & Gas
Deteriorating financial situation due to COVID-19 leads to productivity decline of South American oil and gas pipeline sector, says GlobalData
The South American oil and gas pipelines sector has been impacted by weak demand and low oil and gas prices as a result of COVID-19. The worsening financial situation is leading to delays in the upcoming pipeline projects while measures to curb the spread of pandemic has impacted the operations of existing pipelines, says GlobalData, a leading data and analytics company.
Haseeb Ahmed, Oil and Gas Analyst at GlobalData, comments: “One of the primary measures that a majority of pipeline operators are adopting to contain the spread of the epidemic is halting or delaying any avoidable current or upcoming projects.
“In April 2020, the Peruvian government ordered the shutdown of the Norperuano pipeline system as a precautionary measure against the pandemic. Suspension of operations of this pipeline also led to temporary shutdown of the Bretana oil field, operated by PetroTal. For similar reasons, all retrofitting works to reactivate the Oleoducto Trasandino (OTASA) pipeline have also been delayed.”
Pipeline companies in the region are reducing capex or downsizing the workforce in construction projects. Petroleo Brasileiro SA has cut its capex by almost a third and had reduced its workforce involved in the construction of Rota 3 pipeline and Comperj gas processing project. Frontera Energy Corp, on the other hand, is adopting the strategy of reducing capex by nearly 68% for the year 2020.
Ahmed concludes: “Although pipeline companies are making enormous efforts to tide over the current situation, it might take longer to recoup, given the recurring nature of the pandemic and its scale of the devastation on the oil and gas sector. Diversifying assets or having contingency plans to ensure minimal impact on critical operations may well be some of the answers to bail them out of any such future crisis.”