From The Guardian (Jillian Ambrose):
The world’s largest listed oil companies have wiped almost $90bn from the value of their oil and gas assets in the last nine months as the coronavirus pandemic accelerates a global shift away from fossil fuels.
In the last three financial quarters, seven of the largest oil firms have slashed their forecasts for future oil market prices, triggering a wave of downgrades to the value of their oil and gas projects totalling $87bn.
Analysis by the climate finance thinktank Carbon Tracker shows that in the last three month alone, companies including Royal Dutch Shell, BP, Total, Chevron, Repsol, Eni and Equinor have reported downgrades on the value of their assets totalling almost $55bn.
The oil valuation impairments began at the end of last year in response to growing political support for transition from fossil fuels to cleaner energy sources, and they have accelerated as the pandemic has taken its toll on the oil industry.
Lockdowns have triggered the sharpest collapse in demand for fossil fuels in 25 years, causing energy commodity markets to crash to historic lows.
The oil market collapse, which reached its nadir in April, has forced companies to reassess their expectations for prices in the coming years.
BP has cut its oil forecasts by almost a third, to an average of $55 a barrel between 2020 and 2050, while Shell has cut its forecasts from $60 a barrel to an average of $35 a barrel this year, rising to $40 next year, $50 in 2022 and $60 from 2023.
Both companies slashed their shareholder payouts after the revisions triggered a $22.3bn downgrade on Shell’s fossil fuel portfolio and a $13.7bn impairment on BP’s oil and gas assets.
Andrew Grant, Carbon Tracker’s head of oil, gas and mining, said the coronavirus had accelerated an inevitable trend towards lower oil prices – a trend that many climate campaigners have warned will lead to stranded assets and a deepening risk for pension funds that invest in oil firms.