New oil and gas projects to be sanctioned this year will likely have a 15-percent lower breakeven level than last year’s, at US$44 per barrel of oil equivalent, Wood Mackenzie analysts said in a fresh report on short-term developments in the upstream sector.
The consultancy sees as many as 30 new projects coming on stream this year, but notes that most of these will be small-scale ones, signaling the lingering wariness among oil and gas players of major investments, Oil Price reports.
This is a continuation of a trend started after the 2014 price crash, which saw last year’s average capex per major project—deposits with commercial reserves of 50 million boe or more—drop to US$2.7 billion from US$5.5 billion on average for the last 10 years.
Besides this new frugality, Wood Mac’s analysts note, the oil and gas industry has paid much more attention to brownfield developments and production expansion projects, with offshore operators increasingly turning to subsea tie-ins instead of tapping new fields.
