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Oil supermajors are on the verge of reversing stalled production growth, planning a combined 15 percent increase in their total crude oil output by 2021, according to a Reuters analysis of their latest production and capital plans.
Royal Dutch Shell, ExxonMobil, Chevron, BP, Total, Statoil, and Eni plan to lift their combined output by nearly 3 million bpd over the next five years, according to estimates by Thomson Reuters, Barclays, and BMO Capital Markets.
For example, BP has recently said in its strategy update that “in the Upstream, we expect to add more than 1 million barrels per day of new oil equivalent production by 2021 from 2016.”
On the other coast of the Atlantic, Exxon, for its part, is switching its capital investment strategy towards the U.S. shale patch, prioritizing drilling of thousands of smaller wells while cutting expenditure on the massive projects.
Following the oil price crash, oil majors slashed investments, streamlined costs, and delayed very capital-intensive projects. But now, according to Anish Kapadia, analyst at investment bank Tudor, Pickering, Holt& Co, companies are starting to think about growth again.
“Oil prices are above $50 a barrel, companies are generating cash and are starting to talk about growth again, we are at that point of the cycle,” Kapadia told Reuters.
Related: U.S. Shale Production Growing At An Unprecedented Pace
If companies were to carry out their production plans, Shell could overtake Exxon as the world’s largest publicly traded oil producer by the end of the decade, with planned production at 4.24 million barrels of oil equivalent in 2021, the Reuters analysis showed. But Shell’s production plans could be lowered because it still has plans to sell billions of dollars worth of assets around the world in order to pay for last year’s US$54-billion acquisition of BG Group.
France’s Total SA would be especially well-positioned to reap the rewards of investment it has already made, while other majors are mulling over reinvestment, according to Santander analyst Jason Kenney, as quoted by Reuters.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.