The world\u2019s top energy firms have put off $200 billion in spending on 46 major oil and gas projects due to the oil price slump, according to energy consultancy Wood Mackenzie. This is in reaction to the oil price dropping, with it now at to 4-month low.<\/p>\n
\u201cThe dramatic fall in oil prices in 2014 and subsequent dismantling of 2015 company budgets has, by mid-year, already resulted in over 45 major project final investment decision (FID) deferrals,\u201d analyst Angus Rodger from Wood Mackenzie reported late Friday in his blog.<\/p>\n
The deferred range of onshore, shallow-water and deepwater projects had 20 billion barrels of oil, according to the report.<\/p>\n
Over 50 percent of those reserves are located in deepwater projects, and nearly 30 percent in Canadian oil sands. The majority of the projects are \u201ctargeting start-up between 2019 and 2023\u201d. If major energy firms continue cutting future capital commitments then those dates will be pushed back further.<\/p>\n
BP, Shell, Chevron, Statoil and Woodside Petroleum are said to be among the big companies postponing projects, the FT reports. This week Shell will set out deeper cuts to its capital spending, with its more recent expenditure estimated at $33 billion.<\/p>\n
Postponing \u201cfinal investment decisions\u201d is one of the responses to falling oil prices as it frees up capital that can be deployed elsewhere and pushes back expenditure. This can ease the hit falling crude prices has on revenue.<\/p>\n
Calling off investment also boosts free cash flow and helps the companies cover dividend payouts which can strengthen investor confidence.<\/p>\n
The sliding oil price has been matched by a broader decline in a value of copper, gold and other raw materials, which pushed the Bloomberg commodities index to a six-year low.<\/p>\n
After more than a 30 percent rebound in the first quarter of 2015, oil prices have started falling again.<\/p>\n
On Monday crude fell to near four-month lows due to sharp drop in Chinese stock markets. Evidence of a global oil supply glut has halved prices in the past year also affected the crude plunge.<\/p>\n
Brent crude for September on Monday was down to $53.41 a barrel at 17:20 MSK. West Texas Intermediate (WTI) stood at $47.37.<\/p>\n","protected":false},"excerpt":{"rendered":"
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