Majors Rethink Queue of Projects With Focus Squarely on Costs

摘要

Escalating costs over recent years are making oil companies hold back on final investment decisions (FID), as some projects are being redesigned in an attempt to achieve lower development budgets. In the past, rising oil prices often masked bad investment decisions, but with oil prices more or less flat these days, it is becoming harder to justify big-budget megaprojects and subsequent cost overruns to investors who have long grown weary of spiraling expenditure. Over the last three years global upstream development costs rose by about 29% despite steady Brent crude prices, says a report published last month by Tudor, Pickering, Holt & Co. While some companies are attempting to achieve budget reductions at the pre-FID stage, a few have successfully implemented measures to rein in spending on projects already under development. Cost pressures have been most severe for developments located in deep waters or remote regions, as well as LNG.