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Last Updated: April 21, 2016
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Career Development
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I remember three years ago, same time as now. It was April, and I was looking for an internship placement. I applied with many companies, and kept receiving rejections until finally I received a call from Schlumberger that I would be doing my internship with them in drilling and measurement segment. 


Although companies were doing well at that time as there was no market downturn like the one we are in right now, getting an internship was still a difficult task to do. But when I see how extremely hard it is for students to secure their internship right now, I feel that we were somehow privileged. 


With oil and gas companies cutting their costs down, reducing their workforce and scaling back their recruitment activities, students are met with a tough time securing an internship placement. To succeed in obtaining an internship placement in such a market downturn requires much effort, and different strategies. To help students with this task, here are three advices that I believe could help them secure their internship this year. 

 

1. Act outside the box

 

It is often said "think outside the box", well, it is April now, and definitely there is no time to think, it is time to act. Acting inside the box would be to follow the traditional way of applying for an internship. That starts with preparing your resume and cover-letter. Getting companies' contacts details ready and then start to apply online or send your resume and cover-letter to the HR. Then you wait for the magic to happen. 

 

While acting inside the box often works well in a better state of the oil market, it is highly unlikely that it works well in the current downturn. Oil companies are trying to reduce costs by laying off some of their employees and scaling back their hiring activities. That means your online application will often be rejected or you end up getting no response from companies. And this is the reason why I want you to act outside the box and here is how you do it. 

 

Follow the above steps of applying for an internship and once you are done, you don't really have to wait for the magic to happen. Instead, I want you to prepare yourself to visit those companies. This may sound bizarre at first, but it is exactly what I want you to do. There is no need to start thinking if companies will agree to see you or not, or if they ask you to submit online rather than going to the company's office, because there is a strong reason why you should go. 

 

With many applications sent over to oil and gas companies everyday not only for internship, but also for job, and the fact that companies have reduced their recruitment activities, it is highly likely that your applications will not be looked at. But think about it, what if you pay them a visit, show up in their office, and hopefully you manage to meet their HR, things could go differently. Isn't it? 

 

While it is true that the majority of oil companies have online application and you are requested to apply there, don't forget that many companies allow drop-in resume during conferences and exhibitions which is the same as what you are going to do. You are going to visit the company and drop your resume. The only difference here is that sometimes you need to have an appointment to visit the company. 

 

For companies that are hard to visit unless you have an appointment, there are two ways to get it. First of all, find someone you know working in that company. Ask them if they can help you to visit the company. Most of the time this person will be your senior or someone you met during a conference or any oil industry related activities. Just let them know why you want to visit the company and why they have to help you. Convincing them depends on your ability and skills to convince people. So give it a try. 

 

The second way to secure an appointment is to call the company and ask for an appointment with the HR and tell them that you are a student looking for an internship and that you have an offer for the company which you will discuss with their HR or anyone who will meet you... I've just told you to say that you have an offer for the company, so what a student has to offer a company?

 

2. Offer the company to do a non-paid internship 

 

If you are serious about getting your internship with oil and gas companies in such a market downturn, you should start thinking about a non-paid internship. Many oil and gas companies used to offer paid internship to students where they get a monthly payment while doing their training, however, since oil companies now are more focused on cutting costs down, they reduced or totally closed paid internships positions. 

 

That being said, as a student you are left with no option but to adapt to the current circumstances. Adapting here means to change your strategy from looking for a paid internship to offering companies to do a non-paid internship. This is the offer that I have mentioned earlier which can get you an appointment with the company. Therefore, when you call the company to make an appointment, let them know that you are a student and that you have an offer regarding internship which you want to discuss with their HR. 

 

So why you have to offer the companies to do a non-paid internship. First of all, it addresses the difficult time companies are going through and that you are aware about it. Besides that, it makes you stand out among other normal applicants and consequently increases your chances of securing a placement. It also shows your eagerness to give up money for knowledge and experience. These all are qualities that companies value, and by doing so you may not only get an internship placement but you may also secure your future job. 

 

3. Search for internship outside the oil industry

 

The last advice that I want to share with you on how to secure your internship for this year is to look for internship opportunities outside the oil industry. Oil companies have reduced their openings for internships, and therefore many students will be left with no chance of securing their internship placement within the oil industry. In this case, my advice for you is to look for internship opportunities outside the oil industry. 

 

In my perspective, internship is more about gaining your first experience on how the actual workplace looks like, how employees interact with each. It is about building your interpersonal skills more than building your technical skills as the time is limited. Therefore, in a time where getting an internship placement is hard in your own industry, it is advised that you look for an internship in a different industries, preferably ones that are close to yours. 

 

Don't waste your time waiting for a response from oil and gas companies where you have applied for internship. Look around you, find opportunities in other industries, ask your friends or family to help get a placement for your internship in positions that can give you the same workplace experience, and help you build your interpersonal skills. 

 

Those were the three advices that I wanted to share with you which could help you secure your internship placement in the oil industry or in other industries especially as the time left to start your internship is very short. One last reminder though is; don't forget to prepare an excellent resume and cover-letter as the above tips are only meant to make your resume and cover-letter reach to the HR's hand. And lastly, I wish you all the best in your internship hunting journey. 

 

By Alahdal A. Hussein

university students internship oil market downturn experience soft skills technical skills self-development
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The Impact of COVID 19 In The Downstream Oil & Gas Sector

Recent headlines on the oil industry have focused squarely on the upstream side: the amount of crude oil that is being produced and the resulting effect on oil prices, against a backdrop of the Covid-19 pandemic. But that is just one part of the supply chain. To be sold as final products, crude oil needs to be refined into its constituent fuels, each of which is facing its own crisis because of the overall demand destruction caused by the virus. And once the dust settles, the global refining industry will look very different.

Because even before the pandemic broke out, there was a surplus of refining capacity worldwide. According to the BP Statistical Review of World Energy 2019, global oil demand was some 99.85 mmb/d. However, this consumption figure includes substitute fuels – ethanol blended into US gasoline and biodiesel in Europe and parts of Asia – as well as chemical additives added on to fuels. While by no means an exact science, extrapolating oil demand to exclude this results in a global oil demand figure of some 95.44 mmb/d. In comparison, global refining capacity was just over 100 mmb/d. This overcapacity is intentional; since most refineries do not run at 100% utilisation all the time and many will shut down for scheduled maintenance periodically, global refining utilisation rates stand at about 85%.

Based on this, even accounting for differences in definitions and calculations, global oil demand and global oil refining supply is relatively evenly matched. However, demand is a fluid beast, while refineries are static. With the Covid-19 pandemic entering into its sixth month, the impact on fuels demand has been dramatic. Estimates suggest that global oil demand fell by as much as 20 mmb/d at its peak. In the early days of the crisis, refiners responded by slashing the production of jet fuel towards gasoline and diesel, as international air travel was one of the first victims of the virus. As national and sub-national lockdowns were introduced, demand destruction extended to transport fuels (gasoline, diesel, fuel oil), petrochemicals (naphtha, LPG) and  power generation (gasoil, fuel oil). Just as shutting down an oil rig can take weeks to complete, shutting down an entire oil refinery can take a similar timeframe – while still producing fuels that there is no demand for.

Refineries responded by slashing utilisation rates, and prioritising certain fuel types. In China, state oil refiners moved from running their sites at 90% to 40-50% at the peak of the Chinese outbreak; similar moves were made by key refiners in South Korea and Japan. With the lockdowns easing across most of Asia, refining runs have now increased, stimulating demand for crude oil. In Europe, where the virus hit hard and fast, refinery utilisation rates dropped as low as 10% in some cases, with some countries (Portugal, Italy) halting refining activities altogether. In the USA, now the hardest-hit country in the world, several refineries have been shuttered, with no timeline on if and when production will resume. But with lockdowns easing, and the summer driving season up ahead, refinery production is gradually increasing.

But even if the end of the Covid-19 crisis is near, it still doesn’t change the fundamental issue facing the refining industry – there is still too much capacity. The supply/demand balance shows that most regions are quite even in terms of consumption and refining capacity, with the exception of overcapacity in Europe and the former Soviet Union bloc. The regional balances do hide some interesting stories; Chinese refining capacity exceeds its consumption by over 2 mmb/d, and with the addition of 3 new mega-refineries in 2019, that gap increases even further. The only reason why the balance in Asia looks relatively even is because of oil demand ‘sinks’ such as Indonesia, Vietnam and Pakistan. Even in the US, the wealth of refining capacity on the Gulf Coast makes smaller refineries on the East and West coasts increasingly redundant.

Given this, the aftermath of the Covid-19 crisis will be the inevitable hastening of the current trend in the refining industry, the closure of small, simpler refineries in favour of large, complex and more modern refineries. On the chopping block will be many of the sub-50 kb/d refineries in Europe; because why run a loss-making refinery when the product can be imported for cheaper, even accounting for shipping costs from the Middle East or Asia? Smaller US refineries are at risk as well, along with legacy sites in the Middle East and Russia. Based on current trends, Europe alone could lose some 2 mmb/d of refining capacity by 2025. Rising oil prices and improvements in refining margins could ensure the continued survival of some vulnerable refineries, but that will only be a temporary measure. The trend is clear; out with the small, in with the big. Covid-19 will only amplify that. It may be a painful process, but in the grand scheme of things, it is also a necessary one.

Infographic: Global oil consumption and refining capacity (BP Statistical Review of World Energy 2019)

Region
Consumption (mmb/d)*
Refining Capacity (mmb/d)
North America

22.71

22.33

Latin America

6.5

5.98

Europe

14.27

15.68

CIS

4.0

8.16

Middle East

9.0

9.7

Africa

3.96

3.4

Asia-Pacific

35

34.75

Total

95.44

100.05

*Extrapolated to exclude additives and substitute fuels (ethanol, biodiesel)

Market Outlook:

  • Crude price trading range: Brent – US$33-37/b, WTI – US$30-33/b
  • Crude oil prices hold their recent gains, staying rangebound with demand gradually improving as lockdown slowly ease
  • Worries that global oil supply would increase after June - when the OPEC+ supply deal eases and higher prices bring back some free-market production - kept prices in check
  • Russia has signalled that it intends to ease back immediately in line with the supply deal, but Saudi Arabia and its allies are pushing for the 9.7 mmb/d cut to be extended to end-2020, putting the two oil producers on another collision course that previously resulted in a price war
  • Morgan Stanley expects Brent prices to rise to US$40/b by 4Q 2020, but cautioned that a full recovery was only likely to materialise in 2021

End of Article

In this time of COVID-19, we have had to relook at the way we approach workplace learning. We understand that businesses can’t afford to push the pause button on capability building, as employee safety comes in first and mistakes can be very costly. That’s why we have put together a series of Virtual Instructor Led Training or VILT to ensure that there is no disruption to your workplace learning and progression.

Find courses available for Virtual Instructor Led Training through latest video conferencing technology.

May, 31 2020
North American crude oil prices are closely, but not perfectly, connected

selected North American crude oil prices

Source: U.S. Energy Information Administration, based on Bloomberg L.P. data
Note: All prices except West Texas Intermediate (Cushing) are spot prices.

The New York Mercantile Exchange (NYMEX) front-month futures contract for West Texas Intermediate (WTI), the most heavily used crude oil price benchmark in North America, saw its largest and swiftest decline ever on April 20, 2020, dropping as low as -$40.32 per barrel (b) during intraday trading before closing at -$37.63/b. Prices have since recovered, and even though the market event proved short-lived, the incident is useful for highlighting the interconnectedness of the wider North American crude oil market.

Changes in the NYMEX WTI price can affect other price markers across North America because of physical market linkages such as pipelines—as with the WTI Midland price—or because a specific price is based on a formula—as with the Maya crude oil price. This interconnectedness led other North American crude oil spot price markers to also fall below zero on April 20, including WTI Midland, Mars, West Texas Sour (WTS), and Bakken Clearbrook. However, the usefulness of the NYMEX WTI to crude oil market participants as a reference price is limited by several factors.

pricing locations of selected North American crudes

Source: U.S. Energy Information Administration

First, NYMEX WTI is geographically specific because it is physically redeemed (or settled) at storage facilities located in Cushing, Oklahoma, and so it is influenced by events that may not reflect the wider market. The April 20 WTI price decline was driven in part by a local deficit of uncommitted crude oil storage capacity in Cushing. Similarly, while the price of the Bakken Guernsey marker declined to -$38.63/b, the price of Louisiana Light Sweet—a chemically comparable crude oil—decreased to $13.37/b.

Second, NYMEX WTI is chemically specific, meaning to be graded as WTI by NYMEX, a crude oil must fall within the acceptable ranges of 12 different physical characteristics such as density, sulfur content, acidity, and purity. NYMEX WTI can therefore be unsuitable as a price for crude oils with characteristics outside these specific ranges.

Finally, NYMEX WTI is time specific. As a futures contract, the price of a NYMEX WTI contract is the price to deliver 1,000 barrels of crude oil within a specific month in the future (typically at least 10 days). The last day of trading for the May 2020 contract, for instance, was April 21, with physical delivery occurring between May 1 and May 31. Some market participants, however, may prefer more immediate delivery than a NYMEX WTI futures contract provides. Consequently, these market participants will instead turn to shorter-term spot price alternatives.

Taken together, these attributes help to explain the variety of prices used in the North American crude oil market. These markers price most of the crude oils commonly used by U.S. buyers and cover a wide geographic area.

Principal contributor: Jesse Barnett

May, 28 2020
Financial Review: 2019

Key findings

  • Brent crude oil daily average prices were $64.16 per barrel in 2019—11% lower than 2018 levels
  • The 102 companies analyzed in this study increased their combined liquids and natural gas production 2% from 2018 to 2019
  • Proved reserves additions in 2019 were about the same as the 2010–18 annual average
  • Finding plus lifting costs increased 13% from 2018 to 2019
  • Occidental Petroleum’s acquisition of Anadarko Petroleum contributed to the largest reserve acquisition costs incurred for the group of companies since 2016
  • Refiners’ earnings per barrel declined slightly from 2018 to 2019

See entire annual review

May, 26 2020