Saudi Exec Expects $1 Trillion Drop In Energy Investments
A high-ranking Saudi Aramco executive says the plunge in energy prices already has caused many in the industry to cut spending on oil and gas projects, and the trend probably will continue for a few years, perhaps reaching a cut of $1 trillion in investments.
“Challenges during down cycles are more complicated today than before,” Amin Nasser, a senior vice president for exploration and development at Saudi Aramco,told the Middle East Oil and Gas Show on March 9 in Manama, Bahrain.
“At this moment the global industry is poised to potentially cancel about $1 trillion in capital funding,” Nasser said.
Later Nasser told reporters on the sidelines of the conference that the $1 trillion amount included initiatives that might be delayed, not merely those that would be canceled altogether. “What we’ve heard from the industry is that there is $1 trillion of planned projects that will be dropped or deferred over the next couple of years because of what’s happening,” he said, without identifying his source.
Related: OPEC Boasts About Pain In U.S. Shale
The price of oil has plunged since late June from around $115 per barrel to around $60 today because of an oversupply caused by increased US production of shale oil and weaker demand for oil, especially in China and Europe.
This has eaten into the profits of both big and small energy companies, leading them to cut costs in many ways, including employee layoffs. But the largest hits are being felt in capital expenditures in companies ranging from Exxon Mobil Corp. of the United States, Norway’s Statoil and Britain’s BP.
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