Oil projects for USD 100 billion have been shelved

Oil majors such as Shell, BP and Statoil are setting the pace with postponed or canceled oil projects totaling USD 100 billion in the industry, and this could prove to be just the beginning, reports the Financial Times.
Photo: Hjalmar Otto Fjøsne/Aker Solutions
Photo: Hjalmar Otto Fjøsne/Aker Solutions

Oil companies have either given up or postponed investments worth more than USD 100 billion following the diving oil price, according to a new survey performed by Rystad Energy for the Financial Times.

Projects in the Arctic and Canada have been hit hardest, with 10 projects - for a total value of around USD 34 billion - in Canada having been either pushed or canceled.

Major companies such as Royal Dutch Shell, BP, ConocoPhillips and Statoil have set the pace in the drastic investment reduction efforts through 26 large-scale oil projects around the globe - a development that will in time limit the amount of oil in the market.

The Rystad Energy survey shows that the companies have targeted projects featuring the biggest costs.

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Three of the postponed projects in Rystad's survey are located on the Norwegian Shelf, with Statoil's Johan Castberg as the biggest one, at USD 10.3 billion, Tommeliten Alpha at USD 2.5 billion and Snorre at USD 6.5 billion, reports Norwegian newspaper Dagens Næringsliv.

The largest postponed oil venture is Shell's LNG project Arrow in Australia.

Until a few months ago, oil companies projected an oil price of USD 90 per barrel going forward, but these expectations are now closer to USD 70-80 dollars, and the current pushed or canceled projects could represent the first of even more projects that need to be canceled.

According to the Financial Times, Goldman Sachs has highlighted 61 projects that will likely not be profitable going forward, and half of these are still awaiting official approval.

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