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CAPITAL PROJECTS & CONTRACTSOVERVIEW more news at www.heavyliftpfi.com FIDs to flood in during 2019


More than 100 new oilfield projects are expected to be sanctioned this year as ‘trigger happy’ offshore operators take advantage of low unit prices, writes David Kershaw.


R


ystad Energy’s latest project sanctioning report forecasts that


USD210 billion will be spent on offshore oilfield services globally in 2019, with more than 100 new projects likely to be sanctioned during the year. Offshore contractors have


experienced four consecutive years of declining revenues, but those still standing can expect this to start growing again this year. Rystad estimates that more than 85 percent of the projects


that could be sanctioned in 2019 will generate returns greater than 10 percent, even at current oil prices. “Offshore operators are quite


trigger-happy on final investment decisions (FID) these days, despite the recent reduction in oil prices. 2018 saw the lowest obtainable unit prices since 2006, as much as 30 percent down from the peak in 2014, and that makes their cost per barrel and breakeven prices highly favourable,” said Audun Martinsen, head of oilfield service research at Rystad Energy. “Couple that with one of the


most profitable years for exploration and production companies in decades in 2018, and the recent production cut agreement by OPEC and Russia – offshore operators want to focus on field development again.” According to Rystad Energy, 30 percent of 2019 project value


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sits in the Middle East, 25 percent in South America, 15 percent in both Africa and Asia, and the rest in Europe and North America combined.


Standout projects Standout greenfield projects include Saudi Aramco’s USD12 billion Marjan development, ExxonMobil’s Liza offshore developments in Guyana, and Qatargas’ approximately USD8.7 billion North Field offshore development. Meanwhile, Tom Ellacott,


senior vice president at industry analyst Wood Mackenzie, said: “Oil and gas companies can cope with whatever is thrown at them in 2019.” Exploration and production


majors have exercised considerable cost discipline in recent years and have recapitalised their balance sheets. “Portfolios are set to weather


low [oil] prices, and the recent slide in prices justifies the sector’s conservative mindset. In our view, the commitment to capital discipline will not budge entering


Offshore operators are quite trigger-happy on final investment decisions (FID) these days, despite the recent reduction in oil prices. 2018 saw the lowest obtainable unit prices since 2006, as much as 30 percent down from the peak in 2014.


the New Year,” said Ellacott. Wood Mackenzie expects the


super-majors to continue investing in the USA’s Permian Basin – the ‘home’ of the fracking industry – during 2019.


Operational synergies Scale and operational synergies will allow the largest players to shift to full-scale industrialisation, drilling longer, more capital-efficient wells. This year could also be a


– Audun Martinsen, Rystad Energy


record year for LNG project approvals. Frontrunners in the race to reach an FID include Arctic LNG-2 in Russia, at least one project in Mozambique and three in the USA – amounting to investments in excess of USD50 billion. Expansions in Qatar, Papua New Guinea and Nigeria that could potentially get the green light in 2019 would take that spend closer to USD150 billion.


January/February 2019


HLPFI 57


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