The electric vehicle boom isn’t…
The U.S. rig count fell…
The double supply-demand shock in the oil market could lead to companies deferring as much as $131 billion worth of oil and gas projects slated for approval in 2020, with everyone in the industry--from Big Oil to the small players--is feeling the pain of the oil price crash and looks to weather the storm.
According to an impact analysis from Rystad Energy, oil and gas firms could reduce total project sanctioning this year to just $61 billion at Brent Crude average of around $30 per barrel in 2020. This spending forecast compares to previous estimates from Rystad that as much as $190 billion worth of investments would be sanctioned this year. Of the $61 billion investments expected to receive approval this year at $30 oil, half would be onshore and the other half offshore, according to Rystad Energy, which sees Brent at average $30 “an increasingly likely scenario.”
“Upstream players will have to take a close look at their cost levels and investment plans to counter the financial impact of lower prices and demand. Companies have already started reducing their annual capital spending for 2020,” Audun Martinsen, Rystad Energy’s Head of Energy Service Research, said in a statement.
From U.S. shale producers to Big Oil, everyone in the industry is bracing for pain at $30 oil, and companies are rushing to announce capital expenditure (CAPEX) cuts.
One of the major projects expected to receive final investment decision this year is ExxonMobil’s Greater Liza development offshore Guyana, which encompasses the Payara and Pacora discoveries, according to Rystad Energy.
But in North America, “multi-billion dollar oil projects, including LLOG-operated Shenandoah Phase 1 and the Shell-operated Whale development, could face short-term delays in the offshore sector due to low oil prices, while in the onshore sector operators are expected to wait for the situation to stabilize before committing to new projects,” Rystad Energy said.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.