Any outlook covering a period of several decades is surrounded by plenty of uncertainties that could significantly alter its projected trends. That is the key reason why those who compile these outlooks often avoid the word “forecast”, and talk instead about “scenarios” (the International Energy Agency’s World Energy Outlook) and “cases”.
When Opec and its non-member allies agreed combined production cuts of some 1.8mn b/d for six months from the beginning of this month to speed market rebalancing, there were going to be two keys to success in pushing prices higher — sentiment and reality.
There was an interesting aside in an otherwise routine trading update this week from UK independent Serica. It said operating costs at the Erskine condensate field in the UK North Sea are averaging well below its guidance of $20/bl of oil equivalent (boe), thanks in no small part to the pound’s lower exchange rate against the dollar.
After being a pair of Scrooges for the past two years, oil and gas majors BP and Total have rediscovered the joys of treating themselves to shiny expensive presents this holiday season. The gloss comes from access to new low-cost production now and in the future — gifts that keep on giving.
When oil prices started sliding in mid-2014, most oil and gas firms had little choice but to tighten their belts, postponing and cancelling projects, reducing headcount and focusing on efficiency. Two years on, this disciplined approach to spending has made them leaner and, as a result, more confident in their ability to weather the storm of oil prices staying lower for longer. Continue reading
Big Oil is roaring back into Latin America, sweeping past the detritus of resource nationalism to scoop up acreage once reserved for national oil companies. Ho hum shifts the pendulum, but with a twist: most of the focus is now offshore.
Witness Mexico’s historic auction this week. ExxonMobil, Chevron, BP, Statoil, and Total, plus a smattering of independents, were awarded deepwater acreage in the Gulf of Mexico, some tantalizingly close to prolific developments on the US side of the maritime border. That includes Trion, the Perdido fold belt field that state-owned Pemex will develop with its new farm-in partner BHP Billiton. This wasn’t just a private-sector affair. China’s state-owned CNOOC picked up two blocks, the only bidder to go it alone.
Shell was conspicuously absent from the Mexican winner’s circle, even though it presented an offer for one of the blocks. The European major already has a full plate of offshore assets in Brazil, where it is the largest private-sector producer after state-controlled Petrobras, thanks to its BG acquisition early this year. Expect the gap to narrow as Petrobras’ legacy Campos basin fields decline and foreign firms prepare to operate sub-salt projects, a role that had been, until recently, the exclusive domain of Petrobras. A series of upstream tenders are scheduled for 2017. Oil companies like Shell, Statoil, and Chevron are keeping a close eye on Brazil’s evolving regulations and still-tumultuous politics. Continue reading