How are the world’s oil and gas companies surviving through this downturn? Three CEOs from energy companies worldwide shared how they’re navigating through the storm Monday afternoon during IHS CERAWeek.
“Our activity level is bare minimum. Very few things make sense at $30 oil. It’s really better to leave the oil in the ground and run your company for value as oppose to volume,” said Hess Corporation CEO John Hess, whose company is running two rigs, down from 17 rigs two years ago.
Hess said that $50 oil wasn’t sustainable and the current price of oil, which is hovering around $30/barrel, is even more challenging.
“Globally, as an industry, we had a $100 billion deficit last year and a $100 billion deficit is expected this year,” Hess said. “At my company, we’re guided by three principles: preserve your balance sheet, preserve your operating capability and preserve your long-term growth options. We’re in a long-term business, but everybody is thinking short-term.”
Narendra Verma, CEO of ONGC Videsh Ltd, a multinational oil and gas company based in India, said his company is currently focused on consolidating its portfolio, but once the market recovers, he has interest in four key areas: Russia, Venezuela, Canada and Latin America.
Miguel Galuccio, president and CEO of the fully integrated Argentinean energy company YPF, said his company is coping with the oil price by continuing to advance technology and continuing to look for partners.
“We’re not going to do this alone; we need new players,” Galuccio said. “The growth of YPF has been on the back of our partners, mainly and most importantly, Chevron, Dow Chemical and PETRONAS.”
Galuccio said he believes his company will come out of this downturn as “big winners” because they haven’t laid off as many people or decreased activity as much as some other companies.
Hess said the majority of his company’s spending is currently on long-term growth projects, such as a natural gas project in Malaysia for 2017 and a deepwater project in the Gulf of Mexico in 2018.
“It’s very important for us to keep that operating capability,” he said. “We’re investing through the cycle, but we’re cutting back wherever we can to preserve the balance sheet.”