Energy companies cut capital spending as oil price drops
A steep and prolonged drop in the price of oil has prompted energy companies to rethink their investment strategies.
The oil price plunge will force energy companies to slash capital spending in North America, Europe and Asia in 2015, according to a report by investment bank Evercore on January 6 highlighted in the BangkokPost.
But investment will continue to rise in Africa and the Middle East as producers in those areas seek to boost long-term output in the flooded global oil market.
Evercore estimated that oil companies would cut spending on exploration and production globally this year by 10-15 percent, and by 25-30 percent in North America.
How this might affect investment in Myanmar’s oil and gas fields is as yet unclear.
“To sum it up, a sharp recession is coming to the global oilfield,” said Mr James West, an oilfield services analyst at Evercore, after surveying 300 global oil and gas companies on their 2015 spending plans.
The report shows the impact of the steep drop in oil prices. US oil prices Tuesday closed at US$47.93, down from nearly $107 in June.
The oil-price crash is also beginning to reverberate across other industries. US Steel plans to lay off hundreds of workers due to lower petroleum industry demand for pipes, a union source said Tuesday. About 750 workers are expected to lose their jobs, according to US media.