Project fear

摘要

Big oil needs big projects. FID is written into the majors’ DNA. But shareholders are sceptical. Cost overruns and late delivery dimmed the allure of mega-projects for most investors over the past decade. They want better value for their money. The majors have obliged in recent years by prioritising shorter-cycle investments that provide a quick payback over longer-cycle projects that might yield better returns in the longer term. BP’s recent $10.5bn splash on BHP’s US shale business underlines the shift. The deal, giving BP renewed access to the coveted Permian basin, offers an immediate boost to output and cash flow. And while the majors’ Permian plans grab the headlines, their shift to short-cycle investment has been far wider, encompassing a greater appetite for offshore tie-backs and field extensions.