Inter Pipeline has encountered losses in H1 2020 due to the production curtailment of steel pipes used in the oil and gas industry as global energy prices collapsed. 

 

The steel pipeline manufacturer for the oil and gas industry indicated that it had spent $600mn in capex during H1 2020, of which 85.3pc focused on natural gas (NGL) processing. Inter Pipeline implemented targeted expense reductions due to the uncertainty of demand during the COVID-19 pandemic. 

 

The company also operates energy infrastructure assets in the EU and Western Canada and is currently constructing its Heartland Petrochemical Complex (HPC), in North America, at an estimated cost of $4bn. The HPC is expected to be commissioned in early 2022. 

 

Inter Pipeline’s total pipeline sales volume increased by 6.3pc to 1.5mn barrels per day (b/d) in the six months ended June 30, against 1.4mn b/dn in the same period a year ago.  

 

Inter Pipeline’s revenue declined by 12.1pc to $1.1bn in the first half, against $1.3bn in the same period in 2019 while net income dropped by 57.8pc to $151.6mn in H1 2020, compared to $358.6mn in the prior-year period. Losses on the disposal of assets in NGL processing, conventional, and bulk liquid storage businesses contributed to these results. 

 

Steel demand in the oil industry has decreased, resulting in lower finished steel prices. OCTG J55 domestic prices in the spot market dropped by 15-18pc from $1,000-1,100/nt ($1,102-1,212/mt) on January 3, 2020 to $850-900/nt ($937-992/mt) in early August. 

 

According to the latest Baker Hughes rig count, the North American rig count is at 298 units in August, down by 72.3pc or 779 units compared to a year ago when 1,077 rigs were operating. 

 

However, North America’s rig count increased by four units to 298 units, compared to a week ago, on an increase of seven units in Canada while the US cut three of its oil rigs.

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