IEA: Global upstream budgets already down 21% in 2009
Global upstream oil and gas exploration and production budgets for 2009 have already been cut 21% compared with 2008, according to a report by Paris-based International Energy Agency.
PARIS, May 27 -- Global upstream oil and gas budgets for 2009 have already been cut 21% compared with 2008, according to a report by Paris-based International Energy Agency.
This is almost $100 billion, said IEA in a report on the impact of the financial crisis on energy investments worldwide, prepared for the G8 Energy Ministers Meeting in Rome May 24-25.
The investment drop will continue into 2009, especially in the Organization for Economic Cooperation and Development region and will impact both supply and demand, IEA reported.
From October through April, more than 20 planned large upstream oil and gas projects were either postponed indefinitely or scrapped. The projects were valued at more than $170 billion and involved 2 million b/d of oil capacity and 1 bcfd of gas capacity. A further 35 projects amounting to 4.2 million b/d oil capacity and 2.3 bcfd gas capacity were delayed by at least 18 months.
Oil projects in Canada account for the bulk of the postponed oil capacity. Investments in non-OPEC countries are expected to drop the most as upstream spending has fallen mainly in high-development-cost regions and in areas where small players and projects dominate investments. On the other hand the super-majors plan to cut spending by only 5%.
The report said spending cuts on existing fields could accelerate decline rates. It said exploration spending will be reduced sharply in 2009 as investments are diverted to complete development projects launched before prices slumped.