Home' Trinidad and Tobago Guardian : June 18th 2015 Contents BG8 ENERGY
BUSINESS GUARDIAN www.guardian.co.tt JUNE 2015 • WEEK THREE
Deepwater oil projects and complex gas facilities
worth around US$200 billion have been cancelled
or put on hold worldwide in recent months due
to the sharp drop in oil prices over the past year,
consultancy Ernst and Young said on Tuesday.
Further project cuts and delays are likely as the industry braces
for an extended period of lower oil prices as a result of a supply
"The mind set in the industry at the moment is that prices are
unlikely to be bouncing up materially in the near term," the con-
sultancy's Andy Brogan said in a presentation. "There is an expec-
tation that volatility is with us for a reasonable period of time to
come and companies need to cope with that."
The delays in multi-billion dollar projects that can take up to
10 years to develop, and needed to support rising global demand
for energy, could create a shortage in the future.
International companies have responded rapidly to the near
halving of oil prices since last June, slashing tens of billions of
dollars in capital spending in order to boost their balance sheets
and maintain dividend payouts to investors.
"A total of $200 billion of oil and gas projects have been deferred
or cancelled," said Brogan, global oil and gas transactions leader
at Ernst and Young.
"Portfolios reviews are happening more frequently and probably
with more rigour," Brogan told the World National Oil Companies
Congress. "There isn't anywhere for projects to hide."
The main 24 mega projects that have been put on ice or scrapped
are spread across the globe, according to EY.
For oil, many of the projects are complex, deepwater fields in
the Gulf of Mexico, the North Sea, West Africa and Southeast Asia
with budgets of up to US$20 billion.
Among the most expensive are liquefied natural gas facilities
such as the Arrow liquefied natural gas (LNG) project in Australia,
operated by Royal Dutch Shell's and PetroChina and BG Group's
Prince Rupert LNG project in Canada.
Though often just as expensive, most oil mega-projects benefit
from the advantage of returning value within three to four years
from first investment, compared with up to 12 years for LNG
projects, Brogan said.
"We have seen IOCs (international oil companies) already go
through one rigorous review of their portfolio. We are now seeing
them turning their attention to see how flexibility can be embedded
in their portfolios and businesses." Reuters
Norwegian oil and gas company Statoil says it will
lay off up to 1,500 staff and 500 consultants by the
end of to slash costs.
The state-controlled company said Tuesday the
layoffs are a continuation of a cost-cutting programme
started in 2013, "well ahead of the current downturn"
and the slump in the oil price.
Chief operating officer Anders Opedal called the
reductions necessary "to strengthen Statoil's com-
petitiveness and secure our value creation."
The programme is designed to yield US$1.7 billion
in annual savings starting in 2016.
Norway's offshore oil and gas industry has come
under pressure from the sharp drop in oil prices,
with thousands of workers already laid off.
The industry accounts for more than half of Nor-
way's exports and 80 per cent of the government's
Mexican state energy giant Pemex
announced its biggest exploration suc-
cess in five years, the discovery of new
shallow water oil fields that could yield
200,000 barrels per day.
The fields were found in four loca-
tions in the Gulf of Mexico and pro-
duction could begin in around 16
months, helping Pemex reverse declin-
ing output, said company director
Altogether, the locations off the coast
of Tabasco and Campeche states are
estimated to contain 350 million barrels
of light and heavy crude.
"This is great news for Pemex, the
industry and our country," Lozoya told
an oil conference in the western city
"It indicates that in a relatively short
time, we will ... already be reversing
the (declining) production curve," he
said. "This is Pemex's biggest explo-
ration success in five years."
The discovery could also produce 170
million cubic feet of gas per day.
The find comes a month before Mex-
ico launches the first auction for other
shallow water oil fields since it passed
a historic reform in 2013 that opens
the sector to foreign investors for the
first time since 1938.
The 14 blocks are all in the Gulf of
Mexico and several international energy
firms have already lined up to bid for
them on July 15.
Mexico aims to reverse declining oil
production, which has fallen from 3.4
million barrels per day a decade ago to
2.4 million today.
Declining global oil prices have also
hit Pemex, forcing the government to
slash its budget and cut its growth fore-
cast. Pemex lost US$17.7 billion last
Since late last year, oil and gas companies glob-
ally have fought to sustain the drop in oil prices;
layoffs ensued and companies large and small
And, according to a new study released by the
petroleum labour market information division of
Enform, a safety association for upstream oil and
gas in Canada, there's a prediction that 185,000
jobs will be lost in Canada this year due to the
drop in oil prices.
According to the study, in 2014, the oil and
gas industry spent nearly US$125 billion on explo-
ration, development and production; which sup-
ported more than 720,000 direct and indirect
jobs in Canada. About two-thirds of these jobs
were concentrated in Alberta.
The Canadian Association of Oilwell Drilling
Contractors (CAODC) recently forecasted that
more than 25,000 Canadian drilling jobs would
be lost due to weak oil prices, Reuters reported.
CAODC president Mark Scholz said "potential
policy changes in Alberta with respect to royalties"
and other factors mean members "must continue
to streamline operations and remain agile."
CAODC's predictions for drilling job losses
align with the report.
With an anticipated US$31 billion reduction in
capital expenditure, the biggest impact would be
in oil and gas engineering construction firms
with 75,000 jobs lost, followed by the support
services sector which is heavily involved in explo-
ration and development drilling at 26,000 jobs
Compared to the Great Recession from 2008-
2009, the study finds that job cuts from the oil
and gas downturn are "larger in magnitude but
comparable in scale" to the jobs lost in 2009.
Additionally, the oil and gas downturn "poses
different challenges" than the global recession
and its impacts will "likely unfold in very different
ways across industries and provinces."
The study noted a still uncertain outlook for
the oil and gas industry in 2016 and beyond, and
that there are no indications the industry will
bounce back as quickly in 2016 as it did in 2010
following the recession.
According to the study, "creative recruitment
practices, such as upskilling the current workforce
and effective management and retention of skilled
and experienced workers will become more critical
in the months ahead."
lose 185,000 oil,
gas jobs in 2015
Statoil to trim up to
2,000 jobs by 2016
Low oil price hits US$200
billion in mega-projects
Mexico finds large
shallow water oilfields
Links Archive June 17th 2015 June 19th 2015 Navigation Previous Page Next Page