{"id":8078,"date":"2020-03-31T16:33:23","date_gmt":"2020-03-31T16:33:23","guid":{"rendered":"http:\/\/oilnewskenya.com\/?p=8078"},"modified":"2020-03-31T16:33:23","modified_gmt":"2020-03-31T16:33:23","slug":"global-ep-capex-will-reach-at-least-a-13-year-low-in-2020-as-covid-19-and-price-war-persist-rystad-energy","status":"publish","type":"post","link":"https:\/\/www.oilnewskenya.com\/index.php\/global-ep-capex-will-reach-at-least-a-13-year-low-in-2020-as-covid-19-and-price-war-persist-rystad-energy\/","title":{"rendered":"Global E&P Capex Will Reach At Least A 13-Year Low In 2020 As Covid-19 And Price War Persist \u2013 Rystad Energy"},"content":{"rendered":"

Global capital expenditure (capex) for exploration and production firms (E&Ps) is expected to drop by up to $100 billion this year, about 17% versus 2019 levels, under Rystad Energy\u2019s updated base case scenario of $34 per barrel in 2020 and $44 per barrel in 2021.<\/p>\n

E&P capex in 2019 reached $546 billion according to Rystad Energy estimates, having slightly recovered from a 2-year slump in 2015 and 2016 before diving to around $510 billion from 2014\u2019s historical high of $880 billion.<\/p>\n

According to our data the expected decline this year will make 2020\u2019s capex volumes, estimated at about $450 billion, the lowest in 13 years. Our estimates before the coronavirus epidemic had indicated E&P would remain flat year-on-year.<\/p>\n

As April approaches, when OPEC+ producers are expected to flood the market with even more additional oil, Brent prices are now at nearly $25 per barrel and are likely to decline even further.<\/p>\n

In a low case scenario, where Brent averages $25 in 2020, global investments may plunge to around $380 billion this year, falling to almost $300 billion in 2021, a 14-year and a 15-year low respectively.<\/p>\n

\u201cAs companies are now losing solid oil market ground for a second time in recent years, it will be far more challenging to act quickly and reach the same high level of investment revision without taking a heavy toll on E&P\u2019s performance,\u201c says Rystad Energy\u2019s upstream analyst Olga Savenkova.<\/p>\n

\"\"<\/p>\n

The estimated cost cuts will be mainly achieved by lower activity within US shale, delays to projects that are yet to reach the final investment decision (FID) stage, deferred exploration activity, and cost cuts within development and production for conventional assets.<\/p>\n

As the most flexible of the supply segments in terms of cost reduction, US shale players are expected to reduce their investments by about 30% year-on-year. These measures will be quickly reflected in the oil market supply, with shale oil supply growth set to slow down in 2020.<\/p>\n

Among the world\u2019s largest oil companies, global leader\u00a0Saudi Aramco\u00a0is slashing its upstream capital expenditure by 20% to protect its balance sheet amid declining oil prices. Despite the turbulent oil market, we still expect the company to go ahead with strategically important projects, having one of the lowest costs per barrel within the industry.<\/p>\n

ExxonMobil\u00a0is also considering at least a 20% investment cut, but these plans have not yet been finalized. Considering the company\u2019s underperformance, even deeper cuts may be required to meet most of its important operational targets; it posted weak numbers for the fourth quarter of 2019, announced $20 billion worth of divestments planned for 2020, and maintains big ambitions for exploration and development in Guyana.<\/p>\n

Shell\u00a0will also embrace a 20% total cut strategy, but we expect that upstream budgets will only see reductions of about 14%. The company is also committed to a divestment program of more than $10 billion worth of assets, which could prove challenging to conduct in the current market.<\/p>\n

BP\u00a0has also announced potential plans for a 20% cost reduction. Even though the company holds a geographically diverse and resilient portfolio, we believe its $15 billion asset-sale target might not be accomplished.<\/p>\n

For more analysis, insights and reports, clients and non-clients can apply for access to Rystad Energy\u2019s\u00a0Free Solutions<\/a>\u00a0and get a taste of our data and analytics universe.<\/p>\n","protected":false},"excerpt":{"rendered":"

Global capital expenditure (capex) for exploration and production firms (E&Ps) is expected to drop by up to $100 billion this year, about 17% versus 2019 levels, under Rystad Energy\u2019s updated … Read More<\/a><\/p>\n","protected":false},"author":24,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[11],"tags":[],"class_list":["post-8078","post","type-post","status-publish","format-standard","hentry","category-top-news","entry"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p5JWkQ-26i","jetpack-related-posts":[{"id":8330,"url":"https:\/\/www.oilnewskenya.com\/index.php\/global-upstream-investments-set-for-15-year-low-falling-to-usd383-billion-in-2020-rystad-energy\/","url_meta":{"origin":8078,"position":0},"title":"Global Upstream Investments Set For 15-year Low, Falling to USD383 billion in 2020 – Rystad Energy","author":"","date":"June 15, 2020","format":false,"excerpt":"Following the publication of the upstream industry\u2019s first quarter results, a Rystad Energy analysis reveals a gloomier investment-budget picture than previously thought. 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Similar to the previous downturn, awards are set to\u2026","rel":"","context":"In "Countries"","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/02\/Coral-Sul-Hull-Launch-2.jpg?fit=874%2C874&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/02\/Coral-Sul-Hull-Launch-2.jpg?fit=874%2C874&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/02\/Coral-Sul-Hull-Launch-2.jpg?fit=874%2C874&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/02\/Coral-Sul-Hull-Launch-2.jpg?fit=874%2C874&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":11583,"url":"https:\/\/www.oilnewskenya.com\/index.php\/africa-silent-as-global-oil-and-gas-investments-expand-to-hit-628-billion-rystad-energy\/","url_meta":{"origin":8078,"position":2},"title":"Africa “Silent” as Global Oil and Gas investments Expand to Hit $628 billion – Rystad Energy","author":"","date":"January 12, 2022","format":false,"excerpt":"Global oil and gas investments will expand by $26 billion this year as the industry continues its protracted recovery from the worst of the pandemic and the hurdles imposed by the Omicron variant. 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