British energy giant BP reported a $20.3 billion loss in 2020, down from a $4 billion profit in 2019, driven by a challenging price environment and COVID-19 related demand impacts, according to its financial results statement released on Tuesday.
"2020 will forever be remembered for the pain and sadness caused by COVID-19. Lives were lost – livelihoods destroyed. Our sector was hit hard as well. Road and air travel are down, as are oil demand, prices and margins," BP's Chief Executive Officer Bernard Looney said.
Despite the huge loss in the full year of 2020, the company recorded a $1.4 billion profit in the fourth quarter of 2020 compared to a $0.5 billion loss in the third quarter.
The company's Chief Financial Officer Murray Auchincloss described the results as "strong progress", considering BP posted net losses of approximately $16.8 billion in the second quarter and $4.4 billion for the first quarter of last year.
The company explained that costs resulting from the novel coronavirus (COVID-19) outbreak reached around $0.4 billion for the full year of 2020.
In line with the company's net-zero ambition, Looney said BP set a new strategy to become an integrated energy company and created an offshore wind business in the US.
BP said it anticipates a normalization of the currently high oil inventory levels through 2021 with the help of limited growth from non-OPEC+ countries coupled with active market management from OPEC+.
The company expects a recovery in oil demand in 2021, however, it said the speed and degree of the rebound would depend on government policies and individual self-imposed actions as vaccine distribution proceeds.
Oil prices, which have risen since the end of October last year with the support of vaccine rollout programs and continued active supply management by OPEC+ countries, are expected to remain subject to the decisions of OPEC+, confidence in efforts to manage the rollout of vaccination and further virus control measures, BP said.
While the price of Brent crude averaged $41.84 per barrel in 2020, BP said it estimates the international benchmark would average $50 a barrel between 2021 and 2025, and then increase to an average of $60 a barrel between 2030 and 2040 before it drops to $50 a barrel again in 2050.
"BP now sees the prospect of an enduring impact on the global economy as a result of the COVID-19 pandemic, with the potential for weaker demand for energy for a sustained period," the company said.
The company also explained that it expects an acceleration in the pace of transition to a lower-carbon economy and energy system in the aftermath of the pandemic, as countries seek to "build back better" so their economies will be more resilient in the future.
By Sibel Morrow