JAKARTA. Moody's Investor Service said that the COVID-19 pandemic would disrupt long-term energy consumption patterns, as well as increase the volatility of oil and gas prices.
Steven Wood, Managing Director of Moody's Corporate Finance Group, said this would certainly increase the gap between small and large oil and gas exploration and production companies. Companies with strong capital, said Wood, will consolidate their assets in the United States.
"Meanwhile, companies with high leverage will face difficulties, because the support from banks and investors is reduced," said Wood in his research report.
In addition, said Wood, the pandemic has increased pressure on large and integrated oil and gas companies to diversify their products and reduce carbon emissions. Wood admits that oil and gas companies need extra efforts to reduce production costs.
Meanwhile, the net profit of state-owned oil and gas companies is estimated to recover in the next 2 to 3 years. Of course, this recovery, said Wood, will depend on economic activity and recovery efforts undertaken by governments in each country. (KR/AR)