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The Oil Industry Is Spending Once Again

Oil

Friday April 6, 2018

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. Major projects are back, but in scale downed form

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- The oil industry is once again willing to spend on large projects, but this year’s megaprojects are going to be slightly less massive.
- Wood Mackenzie estimates that 30 major projects will receive final investment decisions this year, down just a bit from 32 last year, but more than the combined total from 2015-2016.
- The cost of the average project will decline sharply to $2.2 billion from $2.7 billion last year and as high as $9.3 billion in 2009.
- The average breakeven price will be about $44 per barrel in 2018, compared to $52 per barrel in 2017.
- In short, the industry is willing to spend, but only on lower-cost and profitable projects.

2. Venezuela production falls again

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- Venezuela’s oil production fell by another 100,000 bpd in March, worse than expected. That takes output down to 1.51 million barrels per day, down more than 600,000 bpd from 2016 levels.
- Venezuela is also a big (involuntary) contributor to the OPEC cuts. OPEC’s collective output fell by 170,000 bpd in March…

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