OCCIDENTAL SEEKS INVESTMENT OPENINGS IN THE MIDDLE EAST
▶ The biggest operator in the US Permian Basin is interested in low-cost barrels farther afield
Occidental Petroleum remains keen to pursue investment opportunities in the Middle East after revising its overall spending plans for next year by 40 per cent following its $38 billion acquisition of Anadarko Petroleum.
Occidental took on Chevron, the world’s third-biggest oil company to acquire Anadarko in a $38bn deal that will give it a stronger position in the Permian Basin, with total production of more than 1.3 million barrels per day, the equivalent daily output of Opec producers such as Libya.
“This year we paused our capital, we reduced it a little bit but that’s kind of a one-year transition. Next year we expect we will increase our capital closer to levels consistent with growth here in the Middle East,” Occidental president and chief executive Vicki Hollub told The National.
“We will continue to grow in the Middle East and the level of capital after we go through this transition next year, we will increase again,” she added.
Occidental is the biggest player in the Permian oil patch, which has been one of the key drivers behind the rise of the US as the world’s top oil producer. The basin produces about 4 million barrels per day, with output expected to reach 5.4 million bpd by 2023, according to IHS Markit, outpacing most Middle Eastern producers with the exception of Saudi Arabia.
Occidental wants to grow its assets in the Middle East, where it acquired concessions in Oman’s Block 72 and Abu Dhabi National Oil Company’s Block 3 earlier this year.
“We’ve grown our position in
Oman, more than doubled it, and ... here in Abu Dhabi, we see lots of opportunities with Block 3,” Ms Hollub said.
“We hope to be drilling no later than the beginning of next year on [Block 3]. We think it’s going to be a significant value for us in the country.”
Investment bank Goldman Sachs has reduced its outlook for US shale growth, revising it to 700,00 bpd for next year, from 1 million bpd previously. It also revised its forecast for 2019 lower to 1.1 million bpd.
“I think the growth from US shale will not continue at the rate that it’s been growing in the past few years. I think it will grow but the rate of growth will probably decline,” said Ms Hollub.
“The rate of growth will be a third or half next year.” Oil prices have remained largely in bearish territory this year, unfazed by geopolitical tensions and a major attack on Saudi oil facilities, as the US-China trade war and a slowing global economy exerted downward pressure on prices.
Shale drillers remain squeezed because of the low oil price environment, with banks reluctant to lend to US energy companies.
Ms Hollub expects more consolidation on the back of the low ebb in investment in the Permian and said the company is still eager on acquisitions following the financial close of Anadarko in August.
“Oh yes, we want to continue to grow our position,” she added.