by Rigzone Staff
Thursday, May 03, 2018
Oil market ‘tailwind’ likely to spark 100 offshore project sanctions in 2018.
The current “tailwind” in the oil market is likely to propel 100 offshore projects to be sanctioned in 2018, according to Rystad Energy.
Around 30 project approvals are forecasted to come through Asia this year, including Pegaga in Malaysia and D6 in India, and another 30 in Europe, including Neptune Deep in Romania and the already sanctioned Penguins redevelopment in the UK.
Africa should also see nearly 20 project approvals, including Zinia 2, Rystad said, and a similar number is forecasted in the Americas. Rystad highlighted that 60 projects were sanctioned in 2017 and less than 40 in 2016.
“Exploration and production companies have more free cash flow at hand in 2018 than they did during the recent peak years of 2008 and 2011,” Audun Martinsen, VP of oilfield service research at Rystad Energy, said in a company statement.
“In fact, 60 percent of the companies looking to finance their project development costs can do so through their cash flow. Supported by strong oil prices, we see a very small risk of these projects not materializing,” he added.
Rystad said the average breakeven price for deepwater developments currently stands at about $45 per barrel, and for shallow water it is close to $30 per barrel.
“Offshore projects can now compete with some of the best acreages in the Permian basin in terms of breakeven prices. With rising inflation in the U.S. shale, offshore appears geared to out-compete shale this year and next,” Martinsen said.
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