COVID-19 May Impact More Than Half of all Oil and Gas Projects Being Sanctioned
A combination of weaker oil and gas demand, and lower oil prices brought on by COVID-19 may lead exploration and production (E&P) companies to reduce project sanctioning by $131 billion, or 68% year-on-year, according to an analysis by Rystad Energy.
The company’s pre-coronavirus forecast had total onshore and offshore projects representing about $190 billion of investments that would be sanctioned this year, which was below the 2019 estimate of $192 billion. If the price of Brent crude averages around $30/bbl in 2020, total project sanctioning estimates are down to $61 billion, with $30 billion of the overall expenditure tied to onshore projects and $31 billion to offshore.
At a $40/bbl average, which Rystad says is getting more distant by the day, total sanctioning would still be down year-on-year at $82 billion, a 57% decline. Project sanctioning schedules are expected to face delays of several months, even for those with breakeven requirements of less than $40/bbl.
In North America, Rystad said multibillion dollar oil projects like 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 other offshore projects like ExxonMobil’s Greater Liza development off Guyana, which encompasses the Payara and Pacora discoveries, are expected to be sanctioned.
Onshore sector operators are expected to wait for the situation to stabilize before committing to new projects.
Oil-Production Costs Reach New Lows, Making Deepwater One of the Cheapest Sources of Novel Supply
In an updated projection, Rystad said that a breakeven of only $50/bbl is needed to produce 100 million BOPD in 2025, reflecting the reduction in oil-production costs.
TechnipFMC Joins Breidablikk Development With EPCI contract
The EPCI contract for the Breidablikk development includes provision of flexible jumpers and rigid pipelines as well as pipeline installation work. About 70% of the value creation in the Breidablikk development phase is expected to go to Norwegian companies.
Equinor Awards Wood $75-Million Contract To Support Mariner Field Development
The latest agreement between Wood and Equinor will begin January 2021. The contract follows recent agreements between the two companies for the Breidablikk development in the Norwegian Continental Shelf.
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08 October 2020
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