Shell, Aramco, Gazprom, Petrobras cut project spending
Four of the biggest oil companies in the world -- Saudi Aramco, Royal Dutch Shell, Gazprom and Petroleo Brasileiro -- have said they will speed up spending cuts and pick projects to delay as the economic downturn takes hold across the world.
According to the Tehran Times, as many as 44 projects are being delayed and may face investment cuts as of Nov. 18.
With oil prices flat-lining at 22-month lows, new oil projects, especially projects that are deep-drilling, oil sands or offshore, are not profitable, and credit is getting more difficult to find.
Shell has postponed plans for a pilot project involving bitumen carbonates in northern Alberta, Brazil's Petrobras has put a five-year business plan and investment schedule on hold, Gazprom is reassessing its spending plan, and Aramco may delay bids for its joint venture refineries for three to nine months, the Tehran Times reported.
Just as companies are losing capital and losing steam, the Paris-based International Energy Agency has projected that $26 trillion needs to be injected into oil production to meet demand by 2030.
Alberta cuts royalties
In times of economic uncertainty, the Alberta government announced it will offer a $1.8 billion break on its new royalty framework in order to give oil and gas exploration a chance to rebound after stocks fell in recent weeks.
Premier Ed Stelmach said the idea is not local to Canada but is something he is seeing other governments do as well, the Financial Times reported.
"The overriding factor here is that the world has changed, and this is all about creating Alberta jobs," Stelmach said.
He said he hopes to allow oil companies and gas firms to keep projects going and in turn keep Canadians employed.
Under the terms of the royalty break, oil and gas companies will have the option to pick transitional royalty terms when drilling new wells between 1,000 and 3,500 meters deep now through 2012.
Prior to the economic crisis, recent legislation was going to bring in more royalties starting Jan. 1. Now the government will lose revenue, but Stelmach hopes by cutting royalties that more projects will come back to his province.
India will explore in Colombia
ONGC Videsh, the overseas investment arm of India's Oil and Natural Gas Corp., announced it has won two onshore oil and gas exploration blocks in Colombia.
"ONGC Videsh has bagged two blocks in Colombia. Block CPO 5 is in the highly prospective onshore Llanos Basin, and block SSJN 7 is in prospective onshore Sinu San Jacinto Basin," the company said.
OVL will hold 100 percent interest in the Llanos Basin block and 50 percent in the Sinu San Jacinto Basin block, the release said.
The blocks were put up for auction by Colombia along with 42 other blocks in four basins.
Brazil's Petrobras and Royal Dutch Shell also won blocks in the same bid.
OVL already has a presence in Colombia with interest in three offshore exploration wells. With the two new blocks, OVL has 37 ongoing projects in 17 countries.
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Closing oil prices, Nov. 20, 3 p.m., London
Brent Crude oil: $51.66
West Texas Intermediate crude oil: $56.86
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