Year-end results dismal for global oil companies – Firms cutting investments, jobs

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According to the published results for the international oil market, the profits of all oil companies fell by 70 percent as well as some dividends. The only exception is ExxonMobil but it also cut its investment plans for next year by billions of dollars just like the rest. They are all planning on major job cuts as high as 20,000 to 17,000 like BP. On the other hand, ConocoPhillips reduced its dividends by 75 percent to 25 cents per share. BP maintained its policy but at the expense of selling its shares globally while Shell is planning the same with $30 billion worth core assets.

Of course, it is the same for oil producing countries, from making net surplus of $1 billion to borrowing money or withdrawing cash from their own local banks or selling their overseas investments.

It is quite shocking to witness the drop in oil prices from $115 in June to $30 a barrel these days. Oil producing governments are facing similar austerity problems and have to face hardcore challenges with the hope that oil prices will recover in the coming years.

However, how optimistic are we about the recovery of oil prices in the coming months? This is what BP, for instance, is thinking which is why it insists on payout to its shareholders and will remain unchanged despite its huge loss of $6.5 billion.

It is quite a gamble on the oil prices with the current OPEC production hitting more than 32.6 million even though the additional Iranian crude oil has not yet arrived in the market but is scheduled to do so by mid of this year.

Oil prices will not improve without any constructive talks between OPEC and Russia, and an agreement among them for joint production cuts; otherwise, everyone can expect further bad news to come. Oil producing countries may have to withdraw heavily from their money reserves or borrow from the World Bank along with further devaluation of their currencies like Russia.

Hard and difficult times are yet to come if no agreement is reached on production cuts.

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By Kamel Al-Harami

Independent Oil Analyst

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