Hopes of an uptick in the oil price took a knock this week as political skies brightened in two major hydrocarbons producing nations.
In battle-weary Iraq, oil exports are set to increase by five per cent in the coming days, after an agreement between the Northern Oil Company (NOC) and the Kurdistan Regional Government (KRG) was reached.
Since 2010, regular disputes over oil revenues and the ravages of warfare have meant a staccato supply from the autonomous region, which would have the 10th largest oil reserves in the world if it were an independent nation. Shipments from three oil fields in Kirkuk - Baba Gorgor, Jambour and Khabbaz – will resume and add 150,000 barrels to the country’s current oil output.
The complexities of pipeline politics have bubbled to the surface once again, this time breaking water in the Baltic Sea.
Nord Stream-2, the Russian Federation’s initiative to circumnavigate war-torn Ukraine as the main transit route for Siberian gas to reach the European markets, has been dealt a blow in the Polish courts.
UOKiK, Poland’s Office of Competition and Consumer Protection, has blocked the establishment of a joint venture between the partners involved in the construction of the 1,200 kilometre gas artery, citing that it would constitute a monopoly in the face of local competition.
Since the first days of the oil price nosedive that began in 2014, the “Oil Capital of Europe” has suffered an incomparable decline. Before the price crash, the UK oil industry is estimated to have supported more than 450,000 jobs across the oil and gas supply chain. By the end of 2016, that figure is forecast to dip to less than 330,000, the majority of the losses in Aberdeen.
There has never been a more critical time for oil and gas companies to eliminate sources of risk and value loss. Forward-thinking oil and gas companies are making changes now to set themselves on a more sustainable path. Those making the commitment to enterprise operational excellence are lowering their risk and emerging leaner, more nimble and more competitive.
Research suggests that on time and on budget completion of complex projects is the exception rather than the norm. In 2014, EY analysed 365 complex projects and found that 64% face cost project overruns and 73% report delays. Completion costs were, on average, 59% higher than initial cost estimates – an increase in total of US$500bn. Clearly, nobody sets out to fail but it appears that they are far from isolated examples when they do. So, what’s going wrong?
Early in 2015, the unthinkable happened, with prices falling below the US$50 mark, lower than they had been at any time since April 2009. But this seems like a very long time ago now, as fears relating to sanctions being lifted on Iran and Iranian production adding to an already stark supply surplus drove the market below US$30 per barrel in mid-January 2016. That’s around a 70% drop in prices since the same time last year.
what is the problem with the way many would approach the issue of managing contact risk in capex projects? Well, think of it in terms of fly swatting. Picture the scene, a fly buzzing around your food is disturbing you. You chase it around the room with various “tools,” and when they don’t work you try to guide it to follow you through an exit point—usually an open window.
Prospective megaprojects in design – a combined group of over $400bn by most estimates – have now been postponed, re-phased, re-cycled or cancelled. Fueled by high oil prices for over a decade, long-cycle industry project portfolios now need to be completely re-modelled to adapt to a structurally lower-price future.
By their nature, mega projects are funded by well-resourced organisations. Typically, funding security has allowed some elasticity for overruns and the associated cost, which recent experience has illustrated can be 15 per cent of project cost.
In this Fuelfighter infographic learn more about projected global growth in energy demand and how energy production can match demand. It also takes a look at the outcomes predicted by some of the leading environmental agencies including, what’s being invested, who’s trying to stop global warming, how energy production could match demand and the projected worldwide growth in energy demand.