COVID-19's Impact on the Global Energy and Power Industry - Survey Results
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
ENERGY AND POWER COVID-19’s Impact on the Global Energy and Power Industry Survey Results
Energy and Power Companies
Have Responded Conclusion
New operational risks could creep into a
business, whether driven by rapid change
or insufficient measures to mitigate the
Operational Limits Cost Control Recovery currently challenging situation.
Two-thirds of energy and Energy and power companies were In the large majority of cases (>85%),
Approximately a third (31%) of energy (oil, power companies did not only considering implementing companies were not chasing
gas, petrochemicals, and derivatives) and expect maintenance and carefully selected, and risk opportunities to re-optimize their Each of these emerging operational
power companies have experienced “no mechanical integrity/fit for managed, temporary cost businesses and were instead focused risks is predictable and manageable.
disruption” since COVID-19 emerged as a service assessments to become reductions to mitigate short-term on defensively safe-parking For example, deferment of non-
global threat earlier this year. operational risk constraints that cashflow constraints. operations. Limited operators were essential maintenance may be managed
drive business disruption. marketing new products, repurposing with a rigorous risk-based selection
equipment, and renting external maintenance program with increased
Capex reduction/delay was the facilities to minimize disruption or focus on risk accumulation.
most commonly considered respond to sudden consumer demands.
mitigation, with more than half of
More than a tenth (13%) of companies planning this or already
energy and power companies said doing so. Non-essential maintenance With greatly increased remote
the current year-to-date financial reduction/delay was the second most working, now is a good time to reflect
More than a third (38%) of companies,
impact had exceeded commonly deployed cash saving on lessons learned from large industry
however, experienced disruption in April
$100 million; 10% expect the mitigation, with more than half of Almost all companies had segregated losses and ensure the quality of
2020, according to Marsh JLT Specialty’s overall 2020 financial impact to companies saying it was at least likely staff and changed working supervision remains high following
recent survey of global energy and power
exceed $500 million. they would reduce these activities patterns (including remote working). the relocation of plant engineers.
companies. Another 28% witnessed
for 2020. Overtime for operations personnel had
disruption from January 2020.
typically been increased.
Nearly half (41%) of surveyed Companies were planning for the worst,
operators had been impacted Critical maintenance was being but so far the issues haven’t been as bad
by customer demand. protected, however, with almost 60% as they expected. As part of their cost
However, companies cited their of companies saying this was not even reduction measures, some maintenance
North American power and renewables
Very few (3%) operators critical suppliers’ capabilities to considered. Most companies were deferments and reductions have been
companies most commonly experienced
reported process safety deliver and logistics limitations as adhering to turnaround schedules, with made. Companies should proceed with
no disruption or disruption only since
incidents that could be most likely to impact them next, around two-thirds not even considering caution, however, as loss data shows
April 2020.
attributed to COVID-19. None although most had not yet been planned delays. a strong correlation between reduced
of the responses were API-754 affected by suppliers. The impact maintenance and higher loss incidents.
tier 1 or tier 2 classified process of storage of raw materials and/
safety incidents. or products had not yet peaked
Meanwhile, Western European and
and was reported as the cause of Some companies were making
integrated national or international oil Around half of companies were at least Arguably, this underlines the industry’s
disruption most likely to become headcount reductions on non-
companies were most likely to have reviewing, with a plan to reducing, tendency to be overly optimistic when
more severe. critical roles outside of process
experienced earlier disruption, as far their minimum staffing level assessing capex reductions’ potential
operations, although a greater number
back as January 2020. requirements in operating areas, negative impact as well as its ability to
were not considering this.
with some already doing so. protect critical maintenance activities.
Although underpinned by good
Most operators did not intentions, history shows that increased
Large companies (measured by combined expect technical operating losses may follow.
production size) were most commonly not limits to cause business
disrupted, while small- and medium-size disruption. This demonstrates Related resources
operators were affected most often. strong industry turndown • Rethinking Business Interruption Risks
capabilities, with operators finding
•1 00 Largest Losses
ways to circumvent engineering
•M anaging the Defeat of Safety Instrumented System Trips and Alarms
constraints on large process
When respondents were asked how long they •P re-startup Safety Review
equipment.
expected the disruption to last from April 2020,
the most common response was 4-6 months (22%),
followed by 7-9 months (19%) and 10-12 months
(13%). Only 3% said it would last three months or less.
1
In April 2020, Marsh JLT Specialty’s Energy and Power Spot Poll surveyed energy (oil, gas, petrochemicals, and derivatives) and power
companies to understand how the industry was responding to, and mitigating the effects of, the sudden reduction in energy demand
COVID-19’s Impact on the Global Energy and Power Industry and the drop in oil price. Respondents ranged from small to very large operators, headquartered across the world. Marsh JLT Specialty
For more information, please contact riskengineering@marsh.com or visit http://riskengineering.marsh.com
This is a marketing communication.
Marsh JLT Specialty is a trading name of Marsh Limited and JLT Specialty Limited. The content of this document reflects the combined capabilities of Marsh Limited and JLT
Specialty Limited. Services provided in the United Kingdom by either Marsh Limited or JLT Specialty Limited; your Client Executive will make it clear at the beginning of the
relationship which entity is providing services to you. Marsh Ltd and JLT Specialty Ltd are authorised and regulated by the Financial Conduct Authority for General Insurance
Distribution and Credit Broking. If you are interested in utilising our services you may be required by/under your local regulatory regime to utilise the services of a local
insurance intermediary in your territory to export (re)insurance to us unless you have an exemption and should take advice in this regard.
The information contained herein is based on sources we believe reliable and should be understood to be general risk management and insurance information only. The
information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such. Statements concerning legal, tax or accounting
matters should be understood to be general observations based solely on our experience as insurance brokers and risk consultants and should not be relied upon as legal,
tax or accounting advice, which we are not authorised to provide.
Copyright © 2020 All rights reserved. June 2020 282068.You can also read
