Projects in the pipeline take a blow as oil prices head south

The plunge in oil prices have hit the upstream sector hard. Cuts are being made across the industry that will have a dramatic impact on the industry’s project pipeline. Global natural resources consultancy Wood Mackenzie believes almost all pre-final investment decisions (FID) on projects will be deferred. And of the 50 or so projects identified with potential to go ahead this year, only 10 have a chance of potentially proceeding. Rob Morris, from Wood Mackenzie’s upstream research team, said: “$110bn (€102bn) of investment will almost certainly be deferred, with another $100bn (€92bn) at risk. “New committed investment could be as low as US$22bn if only the most advantaged projects progress. “Corporate balance sheet strength and strategic drivers are much more important than project economics. Only those with the strongest balance sheets will even contemplate major project FIDs.” Advantaged deepwater oil in places like Guyana and Brazil, along with niche LNG – including low-cost greenfield and feed gas backfill at legacy...