Oil industry face mass bankruptcies

By Syed Sajid Aziz in USA
(Pakistan News & Features Services)

Following the US crude oil crash on April 20, the oil and energy experts have warned that quite a few companies in the oil industry could be forced to shut down in the not too distant future. 

"There are 1,000 producers, and some of these are small producers where the well just runs on its own and it produces, and it probably won't be shut down because the costs are very low," former FERC commissioner and current managing director of Berkeley Research Group, Branko Terzic, was quoted as saying in the media. 

“The WTI is low because it is land blocked and has to go through pipelines. Secondly, storages are probably full, and thirdly, the country is in shutdown. There is just no market for oil. The refineries don't need it. I haven't used my automobile in a week, and I used to drive every day," he added.

"$30 is already quite bad, but once you get to $20 or even $10, it's a complete nightmare. At $10, almost every US E&P company that has debt will have to file Chapter 11 or consider strategic opportunities," Rystad's head of shale research, Artem Abramov, opined. 

According to media reports, Rystad Energy warned that as many as 533 oil companies in the US go bankrupt if oil stayed at around $20 a barrel. 

The oil companies in the US are known to be having high operational costs besides facing different debt burdens. The companies having borrowed heavily in anticipation of higher oil prices are being considered the most vulnerable at the moment.