Energy project spending cut by $100 billion internationally due to oil price, says report

Royal Dutch Shell, BP, ConocoPhillips and Statoil are among companies who have made moves to cut spending on 26 major projects worldwide, the Financial Times said.

The research found that high cost areas have been most affected. For example, nine oil sands projects in Canada, with planned expenditure of $1bn to $10bn, have been put back, the Financial Times said.

Calgary-based Cenovus Energy told Rystad that it had deferred work on its 130,000 barrels a day Narrows Lake oil sands development “due to the substantial decline in crude oil prices”.

The price of oil has fallen dramatically since last June, when it hit a peak of $115 a barrel. Currently at $66, the price reached a low of $45 in January.

The delayed investments will affect future oil production, Rystad told the Financial Times, with up to 1.5 million barrels not likely to come until two years later than planned.

Per Magnus Nysveen, head of analysis at Rystad, told the Financial Times: "We are seeing very steep spending cuts by everyone now, but we don’t expect visible production declines before next year."

The cuts are not limited to western developers, Rystad said: China National Offshore Oil Corporation has cut spending on the Liuhua field, the largest in the South China Sea.

Total upstream investment by non-OPEC countries will fall by about 22% this year, Rystad estimated, with spending down by $200 billion by 2016 from a peak in 2014.

This will be a positive development for OPEC producers, who could sell an extra 2 million barrels a day in five years as a result, Rystad said.