Oil and gas contracts declined in 2020
Due to COVID-19's effect on the overall economy, oil and gas contracts declined in 2020 according to GlobalData.
Oil and gas contract activity remained subdued in 2020, with the industry recording a decrease in the number of contracts and disclosed contract value, according to GlobalData, a leading data and analytics company.
The latest report by GlobalData, ‘Annual Global Oil & Gas Industry Contracts Review’, notes that the number of oil and gas contracts fell from 6,971 in 2019, with a value of $151.06 billion, to 5,014 in 2020, totalling $94.29 billion.
Pritam Kad, oil & gas analyst at GlobalData, said, “The significant drop in contracts and contract value was primarily attributed to industry slowdown following a steep decline in crude oil prices, as well as the effects of the COVID-19 pandemic and lockdowns in 2020. These further led to reduction in capital expenditure from many producing companies and increased project cost with deferred timelines”.
In terms of scope, a total 51% of those recorded in 2020 were operation and maintenance (O&M) contracts, followed by ‘procurement’ contracts, which accounted for 17%.
The majority of contracts were recorded during Q1 2020 (the pre-COVID-19 quarter), with 1,441, and Q2 2020 contributed the most on the disclosed value front with $34 billion during the year.
Kad said, “The last quarter of 2020 was a sigh of relief with relatively stable contract activity, as lockdowns were lifted or eased in many countries, and businesses tried to adapt to the new normal. The marginal improvement seen in commodity prices is giving space for Capex improvement in the upstream industry with an eye for effective future outlook”.