New oil, gas projects to accelerate next year

18 December 2018 | Business

Ron Bousso - The number of new oil and gas projects will rise five-fold next year from a 2015 trough but overall spending is still unlikely to be enough to meet future demand, consultancy Wood Mackenzie said in a report.

Shaken by a sharp drop in oil prices in recent months, boards are generally expected to stick to spending discipline imposed following the 2014 price crash.

Global investment in oil and gas production, known as upstream, is expected to reach around US$425 billion next year, according to WoodMac analyst Angus Rodger.

That compares with a total spending of US$770 billion in 2014, which dropped to US$400 billion in 2016 and 2017.

Although spending levels have slightly recovered since then, next year's capital expenditure will still fall short of the US$600 billion required to meet demand growth and to offset the natural decline of output from fields, Rodger told Reuters.

A handful of the world's top oil companies, including US giants Exxon Mobil and Chevron, said they would boost spending next year as they accelerate developments of highly-productive shale fields.

Spending flat

But overall, companies will seek to maintain spending largely flat in order to return cash to investors after years of pain, Rodger said.

Still, deep cost cuts introduced in recent years and lower rates for drilling rigs and services mean that companies can do more with their money.

In 2019, the number of large new oil and gas projects is expected to reach up to 50, compared with 40 in 2018, and around 10 in 2015, according to WoodMac's 2019 outlook. Large projects hold over 50 million barrels of oil or gas equivalent.

Many of the new projects will be around gas, with a record number of liquefied natural gas (LNG) projects set to get the green light in 2019.

Those include the Arctic LNG-2 in Russia, at least one project in Mozambique and three in the United States, which would together require US$50 billion, according to the report.

"The stars are aligning on LNG sales contracts, corporate appetite, long-term demand and costs. But these are huge investments, and investor confidence could waver if we see signs of cost inflation, global recession and falling prices."

The LNG projects will target 100 trillion cubic feet of gas, up from 80 tcf in 2019 and 32 tcf in 2017.

Spending could see a strong increase in 2020 if oil prices continue rising steadily and as rig costs are expected to rise, Rodger said. – Nampa/Reuters

Similar News

 

PM cracks the whip on SOEs

1 day - 17 June 2019 | Business

Prime Minister Saara Kuugongelwa-Amadhila says the state ownership of public enterprises should not be a justification for their perpetual dependency on national treasury. She said...

Be mindful - boardroom fatigue is real

1 week ago - 05 June 2019 | Business

The PwC Business School is well known for training sessions in directors’ roles and responsibilities as well as corporate governance matters. However, during the month...

Huge blow for insurance firms

2 weeks ago - 03 June 2019 | Business

Eight insurance companies that are challenging the constitutionality of a law requiring them to do business with the state-owned Namibia National Reinsurance Corporation (NamibRe), were...

Erindi, Ohorongo deals under scrutiny

2 weeks ago - 29 May 2019 | Business

ELLANIE SMIT The deal to purchase the Erindi Private Game Reserve through a company registered in the British Virgin Islands is among...

Tough year for Stimulus

2 weeks ago - 28 May 2019 | Business

Stimulus Investments Ltd recorded a net profit of about N$3.8 million for the year ended 28 February 2019 – nearly 22% less than its previous...

Local Rössing jobs safe

3 weeks ago - 28 May 2019 | Business

ADOLF KAUREThe Namibian Competition Commission (NaCC) on Thursday held a public hearing on the China National Uranium Corporation’s proposed acquisition of Rio Tinto Namibia’s stake...

Search for oil and gas resumes

3 weeks ago - 27 May 2019 | Business

A British and Canadian company, Reconnaissance Oil and Gas, has applied for an environmental clearance certificate (ECC) to drill for oil and gas on state...

Swapo HQ 'too big a risk'

3 weeks ago - 27 May 2019 | Business

The requirements of the Swapo headquarters tender were too big a financial risk for local contractors in the current economic environment, says Bärbel Kirchner, the...

Business ponders mass exodus

3 weeks ago - 24 May 2019 | Business

A recent survey by the Economic Policy Research Association (EPRA) of close to 600 businesses concerned about the government's policy direction shows that a staggering...

MTC kickstarts NSX listing process

3 weeks ago - 23 May 2019 | Business

MTC issued a statement this morning saying it “has officially started its journey towards listing on the Namibian Stock Exchange”.MTC will be the first state-owned...

Latest News

Sky is the limit for...

1 hour ago | Technology

Ester Kamati Megan Werner, an experienced model and published author, recently finished building an aircraft along with 20 other youth, which they plan to fly...

The weight of expectation

1 hour ago | Columns

A huge weight of expectation will undoubtedly rest on political leaders vying for office later this year. While there is a sense that the current...

It’s not that serious!

1 hour ago | Columns

Ester KamatiThis may be a worn-out topic but the need to talk about it is quite strong. Lately romantic relationships among youth have simply become...

New name for Etakaya

1 hour ago | Education

Justicia Shipena Etakaya Primary School, situated at Etakaya village of Etakaya in the Ohangwena Region, was recently renamed Sakaria H Nghikembua Primary School.The school...

Feeling the momentum!

1 hour ago | Sports

Ester KamatiWindhoek High School’s Vegkop stadium is home to many memorable games when it comes to rugby and this year was no different. The stadium...

Improving Africa through constructive debate

1 hour ago | Education

Ester KamatiThe 2019 Day of the African Child Debate and Public Speaking Championships knockout rounds were held at the St George's ­Diocesan School on 14...

40 000 to benefit from...

1 hour ago | Environment

More than 40 000 beneficiaries are expected to benefit from a climate change project in the Kunene Region.This is 57% of the total population of...

Houses, drought relief food not...

1 hour ago | Infrastructure

People should not see houses built for them as a way for the ruling party to campaign for the upcoming election, but rather as development...

A platform for leadership

1 hour ago | Education

Michelline NawatisesThe City of Windhoek Junior Council (JC) provides a platform for leadership potential and exposes learners to local challenges.They learn about local issues and...

Load More