InBrief_subbed.qxp 1/4/09 11:50 Page 8
In Brief
In Brief – News, Trends and Statistics
Industry Battles to Maintain will maintain capital spending of around serious supply crunch if capital investment is
Exploration Investment US$31bn, US$1bn more than last year. Chevron not forthcoming.” ■
Total, Shell and Petrobras will maintain or and BP will commit the same capital investment
increase exploration investment this year, while as they did in 2008: US$22bn and US$21.7bn, Eastern Promises – China and Russia
StatoilHydro and Marathon Oil have anounced respectively (see Figure 1). Swap Oil for Loans
cuts as recession hits the oil and gas industry. China has loaned Russia US$25bn in exchange
Not all companies can take the risk. In Canada, for two decades of oil supplies from new fields
The final quarter of 2008 and the first quarter of Synacrude, Petro-Canada and Suncor have put in eastern Siberia. The sum was granted to
2009 have shown a fall in oil demand, with the some costly oilsands projects on hold. Marathon Transneft, Russia’s oil pipeline monopoly, and
US registering the lowest consumption levels for Oil Corporation declared a 24% decrease in Rosneft, the state-owned oil group, who
a decade. Expensive projects, notably the exploration investment from 2008. In the North received US$10bn and US$15bn, respectively.
Canadian oilsands or the ‘pre-salt’ reserves in Sea region, StatoilHydro will reduce capital Transneft’s share is expected to fund Siberian
offshore Brazil, become particularly problematic expenditure from US$16bn in 2008 to exploration and the construction of a 60km spur
during periods of low demand since they US$13.5bn in 2009. Over 65% of other offshore from the East Siberia Pacific Ocean pipeline.
require higher prices to be commercially viable. North Sea operators will also reduce activities this Rosneft’s share will in part service its corporate
However, some suitably resourced companies year. Oil & Gas UK, a representative organisation debt to Western banks, estimated at over
are maintaining or increasing investment in for the UK oil and gas industry, claims UK US$13bn. In return, Russia will supply China
exploration – even if it requires borrowing cash exploration and production investment will fall with 15 million tons of oil per annum for 20
or selling equity – in the hope that new to around US$5–6.5bn in 2009 and to years, providing China with a secure, long-term
production will coincide with resurgent energy US$3.6–5.7bn in 2010 (see Malcolm Webb’s supply of oil, thereby reducing its dependence
demand. Total, the French energy group, will article on pages 22–23). on Middle Eastern supplies.
maintain annual capital expenditure of
US$13.5bn despite a 7.7% drop in annual Nobuo Tanaka, Executive Director of the The trade agreement, the largest ever between
profits in 2008. “We are committed to International Energy Agency (IEA), warns that the two nations, represents the growing
maintaining our investments,” explained Total’s reductions in exploration activities, when convergence of Russian and East Asian energy
Chief Executive Christophe de Margerie. “It viewed in the context of our numerous ageing interests, underscored by Russia’s recent
would be a serious error not to.” Petrobras – oilfields and production cuts from the entrance into the liquefied natural gas (LNG)
which suffered a 40% fall in share price in Organization of Petroleum Exporting Countries market. Taking advantage of its geographical
summer 2008 – has also committed US$15.9bn (OPEC), could lead to a severe energy shortage position, the growing desire for natural gas and
to 2013 in offshore Brazil, the Gulf of Mexico, when the economy recovers. “Currently, the falling costs associated with its production,
Argentina, Nigeria and Angola (seeking some demand is very low due to the bad economic Gazprom has already supplied LNG cargo to
external financing in return for supply equity). situation,” Mr Tanaka said. “But when the Japan and South Korea. Furthermore, the
Royal Dutch Shell, the EU’s biggest oil company, economy starts growing, we may have a corporation has launched its first LNG plant –
Figure 1: Capital Expenditure as a Percentage of Market Figure 2: Distribution of Hydrocarbons Produced by Gazprom Across
Capitalisation (2009) Russian Regions (2007)
40
35
510.6
30
2.8
31.7
25
%
0.2
0.1
6.2
20
18.7
Northwood
0.03
federal district 18.7 Far eastern
15
federal district
0.6
0.6
0.3
13.4
Urals federal
10 district
0.3
548.6
Volga federal
district
Siberian federal 34.0
4.3
5
district
0.1
0 Southern federal
11.3
Royal Dutch Shell Gazprom PetroChina BP district
ConocoPhilips Chevron ExxonMobil Eni Oil (min t) Condensate (min t) Gas (bcm) Total
8
© TOUCH BRIEFINGS 2009
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