The new coronavirus and the sharp drop in the price of oil and raw materials in the sector are forcing the oil companies to review their business plans.
“Further details on the review of the business plan and the projects affected will be available at the end of April, in the quarterly presentation” of the company’s activity and results, a source from Italian oil company Eni said.
The statement came after Claudio Descalzi, Eni’s executive director, announced on Wednesday cuts in capital spending for 2020 and 2021, a quarter less than forecast this year and a one-third cut next year.
The projects in question “are mainly related to upstream activities, in particular, the production, optimisation and development of new projects scheduled to start in the short term,” the CEO said, without giving any further details.
Eni’s partner in Area 4 natural gas exploration in Mozambique is in a similar position.
“Based on this unprecedented context, we are assessing all appropriate measures to significantly reduce capital and operating expenses in the short term,”, Darren Woods, president and CEO of ExxonMobil said 11 days ago.
Asked about possible impacts on the timeframe envisaged for announcing a final investment decision in Mozambique, which was scheduled for this year, the company’s source said that on principle, the firm “does not speculate on timeframes”.
“The Rovuma LNG project is complex and will take several years to develop,” he said, adding that ExxonMobil “has emergency and security protocols in place to mitigate risks in a variety of scenarios, including the global challenges raised by Covid-19.
At this time, “the focus continues to be on staff health and safety.
Area 4 is operated by Mozambique Rovuma Venture (MRV), a joint venture co-owned by ExxonMobil, Eni and CNPC (China), which holds a 70% interest in the concession contract.
Galp, KOGAS (South Korea) and Empresa Nacional de Hidrocarbonetos (Mozambique) each have a 10% stake.
ExxonMobil will lead the construction and operation of the liquefied natural gas production units and related infrastructure on behalf of MRV, and Eni will lead the construction and operation of upstream infrastructure.
The new coronavirus, responsible for the Covid-19 pandemic, has already infected more than 500,000 people worldwide, of whom around 23,000 have died.
At least seven infections with the new coronavirus have been reported in Mozambique.
LFO/ADB // ADB.
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