The coronavirus pandemic and the resulting oil price crash are set to wipe out as much as US$1.8 trillion from the revenues of oil and gas exploration and production companies this year – the worst-hit sector in terms of dollar revenue, Fitch Ratings said in a new report.
“The critical and expensive nature of oil and gas extraction (in terms of revenue, opex and capex) means that this sector dominates our lost-revenue projections, accounting for USD1.8 trillion of lost revenue globally in 2020. This is six times greater than the impact on the more visibly affected retail sector,” Fitch Ratings noted.
Globally, the COVID-19 pandemic is set to destroy as much as US$5 trillion in revenue for corporates which Fitch tracks in all sectors, the rating agency said.
“The oil and gas sector accounts for the most revenue destruction in dollar terms, representing 40 percent of the aggregate revenue fall,” according to Fitch Ratings.
“While the oil price has recovered from historic lows, pricing is still well inside our price-deck estimates and we expect economic sentiment to remain subdued after the initial post-lockdown euphoria dissipates,’’ the agency added.