Baku, Azerbaijan, July 11
By Leman Zeynalova – Trend:
The number of upstream projects reaching FID (final investment decision) in 2017 could double to 25 compared to only 12 last year, according to a recent Wood Mackenzie report "A big year for FIDs: 2017 marks a turning point".
“In the first half of the year, the industry has already witnessed 15 project sanctions which equates to about 8 billion barrels of oil equivalent (bnboe) of reserves, mostly in brownfield projects. This is almost comparable to project sanctions in the whole of 2016, which saw 12 FIDs and 8.8 bnboe of reserves approved,” said the report.
Angus Rodger, research director, Asia-Pacific upstream said that these are positive signs that the upstream industry is continuing on the road to recovery and that the more competitive conventional projects are moving down the cost curve sufficiently to attract new investment.
Another clear trend is that the Majors dominate the FIDs scene, according to Wood Mackenzie.
“Eight of 15 project sanctions in 2017, are operated by the Majors. Of the 35 mid-to-large* projects sanctioned since the start of 2015, 19 were Major-operated,” said the report.
Wood Mackenzie estimates that these projects would make up 1.6 million boe/d of net new production to the Majors by 2024.
"The second half of 2017 could see another 11 bnboe of reserves hit FID, and again we expect strong activity from the Majors. However, it is also important to note that last month ExxonMobil sanctioned the first phase of development on the 1.5 bnboe Liza oil field. This goes to show that it is not just about short-cycle investments; the best greenfield opportunities are also moving forward to commercialization," says Rodger.
Follow the author on Twitter: @Lyaman_Zeyn