Global biggest oil and gas producers to cut investment again in 2016
With crude prices at 11-year lows, the world's biggest oil and gas producers are facing their longest period of investment cuts in decades, but are expected to borrow more to preserve the dividends demanded by investors.
At around USD 37 a barrel, crude prices are well below the USD 60 firms such as Total, Statoil and BP need to balance their books, a level that has already been sharply reduced over the past 18 months.
International oil companies are once again being forced to cut spending, sell assets, shed jobs and delay projects as the oil slump shows no sign of recovery.
US producers Chevron and ConocoPhillips have published plans to slash their 2016 budgets by a quarter. Royal Dutch Shell has also announced a further USD 5 billion in spending cuts if its planned takeover of BG Group goes ahead.
According to the Oslo-based consultancy Rystad Energy, global oil and gas investments are expected to fall to their lowest in six years in 2016 to USD 522 billion, following a 22 percent fall to USD 595 billion in 2015.
Mr Bjoernar Tonhaugen, vice president of oil and gas markets at Rystad Energy, said that "This will be the first time since the 1986 oil price downturn that we see two consecutive years of a decline in investments."
However, the activities that survive will be those that offer the best returns.
Source : Reuters