![[TW]Fox](/data/man-of-honor/2009.png){kind=avatar}
Not true.
What you mean is that at the current price, some production streams do not generate profit. Many others continue to do so and I'm confident you won't see all of the big oil majors posting real losses at the end of the year.
Fuel up/down again
- Thread starter [TW]Fox
- Start date
Not true.
What you mean is that at the current price, some production streams do not generate profit. Many others continue to do so and I'm confident you won't see all of the big oil majors posting real losses at the end of the year.
Man of Honour
lol, some people, surely better to sell at a loss and then buy cheaper stock than to sit on what you have and generate no sales
Associate
[TW]Fox;28970495 said:
well I work for an oil company and I know inside out that we have issues with our cash flows. If you are referring to onshore operations in places like middle east then yes many of the operators there can make profit. Not in north sea mate. At this oil price, most of the north sea fields are running into negative cash flows. The majors you are referring to may make a net profit but that is not just for the north sea. Obviously they are operating all over the world. UK government can only tax them for revenue they generate within UK
Associate
He's a new owner and only took the place over a few months ago, I'm sure he'll learn!!
Soldato
- Joined
- 29 Jun 2004
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- 12,957
Are the prices of engine oils and lubricants also coming down?
My comment was more related to the downstream piece which is stuff like acetyls, refineries, fuels and any other products (plastics etc). End consumer stuff is really limited to fuels and oils, although they touch anything plastic
Ask the shops who sell them about prices. As no consumer buys direct from oil companies. Also a lot of the overheads are fixed, and supply and demand of many components drive prices rather than linking directly to commodity indexes.
Have iPhones or Tupperware pots got cheaper with lower oil price ?
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Associate
You are missing investment projects which have been started or completed which assumed a higher price to be profitable. You either mothball those projects writing off very expensive assets or try and minimise losses by pumping as much as you can if the marginal cost is low enough.
Downstream work can't save you from previously investing $1bn in a project which now can't produce the return to pay that back.
Just look at how many companies are going bust in the US at the moment. Whilst the big oil companies won't be going bankrupt they'll have many projects on their books which are bankrupt.
All you need to do is look at the share prices of Shell, Exxon etc.
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Soldato
OPEC output surely has been increased to drive down oil prices and hence make the US 'explosion' in fracking less viable? Oil prices nice and high = plenty of interest and investment into things like fracking.
Someone said at low oil prices. 'Oil companies do not make money'. Fox and I responded to that. Obviously any company that is just selling commodities is at the mercy of the market, look at Rio tinto and the effect of iron ore prices
People who think all oil companies make no money are probably the same people who linked global oil company profits to the price of fuel in the UK.
People who think all oil companies make no money are probably the same people who linked global oil company profits to the price of fuel in the UK.
Indeed this is why many of the big companies always planned for a $40-60 oil price and why speculative investments were incorrectly made with higher prices
Amazing how the world has changed since the 'peak oil' $145 a barrel. But then of course political issues come into it. For example the Saudis quite like the western reliance on their oil and low prices force out the us domestic competition
Soldato
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That's a pointless comparison. You can't buy a BP iPhone. Or a BP tupperware box. You can buy BP Vanellus Max 5W-30 engine oil lubricant, or Mobil 5W-30 engine oil lubricant - both companies extract crude oil and produce products their own products.
It isn't at all. You don't put crude oil into an engine
Also how many Oil company X made components do you think are in X engine oil? It won't be 100% as not every company is vertically integrated and the supplying market isn't a commodity market. Many base oils are short
But you said..
'at this low oil price, oil companies do not make any money.'
This is completely untrue.
But you said oil companies do not many 'any' money. Now you concede they do?
You said 'at this low oil price, oil companies do not make any money.'
Not 'at this low oil price, oil companies who produce oil from solely North sea fields do not make any money.'.
And I'm sure as a result some of the less diversified firms are, as you say, not making any money. But many others are. Shell don't just make money pulling oil out of the ground and selling it to commodity speculators on the futures market.
Your comment was just not true.
Don
Still plenty of oil companies making money from the North Sea. Average lift cost in the UKCS even prior to cost cutting was only $27 a barrel...
Associate
its just funny how a normal consumer thinks that oil companies are making money under these oil prices. fill your tanks while its low, will not stay like that 
Soldato
Lift cost doesn't include all the costs of operating the company and investing in future work / maintenance though. Portfolio-averaged cost per barrel of BP/Shell etc. is officially around $10-20/bbl, but factor in the cost of running a huge company and they are not breaking even at the current price. Especially in the N Sea, where maintenance of the infrastructure is quite expensive. Ignoring downstream of course, who are doing rather well at the moment. They probably still have their bonuses slashed due to the inherent weighting of upstream on the revenue of an O&G company
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