OIL & GAS: $1 TRN CANCELLED
The oil and gas industry may cancel about $1 trillion of planned projects globally in the next two years due to the fall of the oil price.
This is according to a senior Saudi Aramco executive, who spoke at a conference in Bahrain on Monday.
"Challenges during down cycles are more complicated today than before...At this moment the global industry is poised to potentially cancel about $1 trillion in capital funding," Amin Nasser, senior vice president for upstream operations said.
Speaking to reporters later, Nasser clarified that the $1 trillion figure included projects that might be delayed, not just those that could be cancelled.
"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.
Brent oil, the Middle East price benchmark, collapsed from $115 a barrel in June 2014 to around $60 in the past months amid a global supply glut and weaker global demand.
As a result, producers have been looking at ways to reduce cost with some renogiating contracts and even cutting their budgets.
Aramco itself put on hold its deepwater oil and gas exploration and drilling activities in the Red Sea and suspended plans to build a $2bn clean fuels plant at its largest oil refinery in Ras Tanura.
The company's chief executive Khalid al-Falih said in January that the company would renegotiate some contracts and postpone some projects because of the price of oil.
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REUTERS - Brent crude futures LCOc1 were down 72 cents at $61.49 per barrel at 1020 GMT, having fallen by 1.5 percent on Tuesday, its largest one-day drop in a month. U.S. West Texas Intermediate (WTI) crude CLc1 was at $55.12 per barrel, down 58 cents.
BLOOMBERG - Prices dropped during the session as the International Energy Agency said the recent recovery in oil prices, coupled with milder-than-normal winter weather, is slowing demand growth. The worsening outlook for consumption dampened some of the enthusiasm that OPEC and its allies will extend supply curbs.
Global energy needs rise more slowly than in the past but still expand by 30% between today and 2040. This is the equivalent of adding another China and India to today’s global demand.
Product exports have grown significantly over the past several years and are expected to continue to grow as Russian refineries add capacity to produce more high-quality products.