(May 22): Oil and gas is facing an unprecedented crisis. For an industry already troubled with low total shareholder returns (TSR) and investor flight, a Covid-19-induced demand drop of over 20%, more than 20m barrels per day, has been a body blow.

The oil and gas industry has turned to short-term mitigation efforts in order to ride the waves of current market volatility. With balance sheets far weaker than at the outset of previous crises, the industry is focusing on time-honoured measures of cash preservation, cost-cutting, and enhanced operational efficiency. These measures alone will not be enough to ensure long-term resilience.

The supposed end-point to this crisis is a viable global vaccine, with no certainty about when this vital therapeutic outcome will be delivered. Oil and gas operators now face a pivotal period of structural reform if they wish to maintain the long-term sustainability of the industry.

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