• 4 minutes Ten Years of Plunging Solar Prices
  • 7 minutes Hydrogen Capable Natural Gas Turbines
  • 10 minutes World looks on in horror as Trump flails over pandemic despite claims US leads way
  • 13 minutes Large gas belt discovered in China
  • 11 mins Would bashing China solve all the problems of the United States
  • 8 hours Yale University Epidemiologist Publishes Paper on Major Benefits of Hydroxchloroquine for High-risk Outpatients. Quacksalvers like Fauci should put lives ahead of Politics
  • 14 hours Model 3 cheaper to buy than BMW 3 series.
  • 8 hours COVID 19 May Be Less Deadly Than Flu Study Finds
  • 21 hours China to Impose Dictatorship on Hong Kong
  • 22 mins Pompeo's Hong Kong
  • 11 hours Thugs in Trumpistan
  • 3 hours China’s Oil Thirst Draws an Armada of Tankers
  • 4 hours China To Boost Oil & Gas Exploration, As EU Prepares To Commit Suicide
  • 2 days Iran's first oil tanker has arrived near Venezuela
  • 2 days Let’s Try This....
  • 2 days Chicago Threatens To Condemn - Possibly Demolish - Churches Defying Lockdown
  • 1 day 60 mph electric mopeds
The U.S. Becomes The World’s Swing LNG Producer

The U.S. Becomes The World’s Swing LNG Producer

The United States has turned…

U.S. LNG Investment Suffers As Demand Dwindles

U.S. LNG Investment Suffers As Demand Dwindles

Weak demand is sparking a…

National Oil Companies Slash Exploration Budgets As Low Price Bites

In response to the industry downturn, national oil companies (NOCs) are set to slash their exploration budgets by 26 percent on average this year, Wood Mackenzie said in an analysis on Wednesday.

The consultancy analyzed media announcements and tracked well plans of 11 large spenders among NOCs—three Chinese NOCs, Thailand’s PTTEP, Malaysia’s Petronas, India’s ONGC, Qatar Petroleum, Russia’s Rosneft and Gazprom, Brazil’s Petrobras, and Mexico’s Pemex.  

Although all of those NOCs are axing exploration budgets in the near term, the measure is likely to be just a short-term move because exploration is an important part of NOCs business for the longer term, much more so than exploration is for the supermajors, WoodMac said.

NOCs invested on average 17 percent of their upstream budgets in exploration between 2015 and 2019, while the international oil majors spent an average 8 percent of upstream budgets on exploration in that period, according to Wood Mackenzie senior analyst Huong Tra Ho.

Many NOCs will cut spending on upstream exploration abroad, prioritizing domestic exploration and investments amid the industry slump and the global economic downturn in the pandemic, which weigh on oil and gas-rich countries.

“Most NOCs on the list carry strong government mandates. Many NOCs prioritise current revenue and contribution to government budgets at the expense of capital investments for the future. A dollar invested at home remains at home in the form of local employment, local services, taxes and government take,” Ho said in a statement.

In redrawing exploration plans, NOCs with limited discovered domestic resources could try to protect exploration budgets as much as possible. These are Petronas and China’s CNOOC, for example. On the other hand, Russia’s Rosneft and Gazprom, who have long reserve lives, are not as pressured to protect exploration spending from cuts, Wood Mackenzie said.

The exploration budget reductions at NOCs are likely only near-term measures in response to the industry environment, WoodMac said, adding that “We expect NOCs to revitalise their exploration programmes as the sector recovers.”

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News