Page 12 - ITATUBE Journal 1 2020

Market information
Figure 5: Cost to produce a barrel of Oil Source: UCube by Rystad Energy, published October 2nd, 2018
demand by enlarging the national oil reserve volume.
The second oil and gas market rep- resent gas and oil pipelines. The pipeline market is a project-based business with long planning periods and high political deter- minations. Most of such projects are not yet so much affected by the corona pandemic if the rel- evant global supply chains are working. Pipeline projects are planned in e.g. Europe, USA and Asia. In Europe gas pipelines are mainly built to serve gas from gas and oil fields in Russia and in the North Sea. In the USA the new Keystone XL pipeline is planned to transport oil from Canada to the petrochemical centres in the US. In Asia they shall serve the new petrochemical complexes in Malaysia and Indonesia. All these projects are intensively discussed on political and environmental platforms. The European project “Nord Stream” is a good example, since the US president Mr. Trump and the Polish government are using all their influence to ban this project (Figure 7).
The US government has even imposed trade sanctions on the involved international compa- nies. Although the US oil and gas exports to the EU have been raising significantly, the US gov- ernment want to ban competition from Russia. - Poland on the other had want to secure its income related to oil and gas being trans- ported through pipelines on their territory. On the other hand, the US pipeline project “Keystone XL” (Figure 8) is supported by Mr. Trump but environmental activ- ists are fighting hard against the project. Due to such interventions is becomes more and more diffi- cult to predict pipeline project
Figure 6: Horizontal rig count by main hydrocarbon type* Source: Baker Huges, Rystad Energy research and analysis, published April 2020
different countries to produce and pump oil and gas (Figure 5) it becomes obvious how critical it is if the oil prices crashes down to levels, we have seen this April 2020.
The oil exploration industry stops its drilling activities at such low oil prices. The USA for example, who became, due to its fracking boom, the largest oil and gas producing country in the world, reduced its horizontal drilling activities by about 26% since
March 2020 (Figure 6). The cost to produce US fracking oil is much higher than the present market price. Many analysts even expect bankruptcies of such companies who produce oil at higher prices. At the same time, the storages for OCTG tubes and pipes are filling up causing order volumes and prices sliding down for the tube and pipe industry.
To stimulate the oil market the US president Mr. Trump announced on April 21st to increase the oil
ITAtube Journal No1/July 2020
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