Oil projects in jeopardy as prices fall

BARCELONA, Spain, Nov. 19 (UPI) -- The declines in the world crude oil market may force oil majors to postpone future projects even if prices remain steady, Chinese officials said.

Addressing a delegation of oil majors in Barcelona, Spain, Fu Chengyu, the top official at the state-owned China National Offshore Oil Corp., said investment projects may face cancellation if crude prices hover at $50 per barrel, with further drops predicted toward $40, the Financial Times reported Wednesday.

"Nobody knew where (prices) would be, but most of them said around $40," he said of the consensus at the meeting.

He said if oil prices stayed at their current levels, near $51 in trading Wednesday on the New York Mercantile Exchange, the majority of projects planned for 2009 would be postponed.

"If the oil price remained around $50 or $55, that would mean cutting at least 60 percent of budgeted projects for the next one or two years from the national oil companies," Fu said.

The Platts news service reported Tuesday the Organization of Petroleum Exporting Countries predicted the global demand for oil for 2009 was expected to rise by 490,000 barrels per day, down from earlier estimates of 760,000.

OPEC in October announced production cuts of 1.5 million barrels per day in an effort to boost oil prices and hinted at additional cuts in December.