[AirlinePilot]

Costs Slide Prompts Wave Of Project Delays

"The global financial crisis is poised to cut a swathe through projects throughout the Gulf."

"When a company like Saudi AramcoSaudi Aramco starts to delay project bids, it generally spells trouble for many others and a triple whammy of uncertainties – materials, financing, and oil price – suggests that negotiations on project pricing between sponsors and contractors will become tougher in the months ahead, and that further postponements are likely."

http://www.zawya.com/story.cfm/sidv51n4 ... 20Projects

[AirlinePilot]

Slowdown signs - Oil industry CAPEX to fall if crude steady


Reuters citing Mr Helge Lund CEO of Norwegian oil and gas producer StatoilHydro as saying that, the company expects the oil industry's investment spending to continue to decline in 2010 if oil prices remain steady around current levels. Mr Helge Lund said "If the current oil price environment continues and the outlook is not significantly changed, there will be further reductions in investments in the oil sector generally, and more specifically on the Norwegian continental shelf. He said that it was too early to discuss more exact CAPEX plans for 2010 and would not specify the oil price needed for investment pending to remain steady next year.” StatoilHydro has forecast CAPEX spending of roughly USD 13.5 billion in 2009 down from USD 16 billion in 2008. But he said StatoilHydro has had constructive dialogue with oil services providers over costs and quality. Last year Mr Lund called on oilfield service companies to cut costs. Mr Lund said "We see all over the world that people have to adjust their cost base, and we have a common interest in doing this because without it, it would be hard to launch new projects."

http://steelguru.com/news/index/2009/04 ... teady.html

$this->bbcode_second_pass_quote('AirlinePilot', '[')b]Costs Slide Prompts Wave Of Project Delays

"The global financial crisis is poised to cut a swathe through projects throughout the Gulf."

"When a company like Saudi AramcoSaudi Aramco starts to delay project bids, it generally spells trouble for many others and a triple whammy of uncertainties – materials, financing, and oil price – suggests that negotiations on project pricing between sponsors and contractors will become tougher in the months ahead, and that further postponements are likely."

http://www.zawya.com/story.cfm/sidv51n4 ... 20Projects

[AirlinePilot]

You just dont understand the problem with reduced costs do you OF???

At some point the loss of revenue from lowering costs, both in the materials industry and the oil sector result in ...wait for it.........


BANKRUPTCY and loss of capacity. Which results in less ability to move forward with new projects and already delayed ones. You need to think ahead a bit OF, your not planning the moves far enough out. This is the crux of the problem and its getting bigger all the time. The inability to predict costs for projects, even if they are LOWER causes delay or cancellation due to risk. Down the road a piece, if and when demand does come back, where are you going to be??

Maybe this is rocket science for you but it isn't for me.

[AirlinePilot]

Indian Oil Delays Overseas Investment on Reduced Cash

July 14 (Bloomberg) -- Indian Oil Corp., the nation’s biggest refiner, will delay crude-processing and pipeline projects overseas, including Nigeria and Turkey, because of reduced cash flow after selling fuels below cost.

“We may not be able to expand overseas in a big way because of the liquidity crunch,” Brij Mohan Bansal, the company’s director of planning and business development, said in a telephone interview from New Delhi yesterday, without providing details. “We are keeping on the backburner our overseas projects, be it refineries or pipelines.”

State-run Indian Oil, which owns stakes in ventures in Africa and the Middle East, had planned to expand overseas to offset some of the loss in revenue from selling fuels below cost to help the government curb inflation. Revenue loss for Indian Oil and its rivals may reach 150 billion rupees ($3 billion) in the year ending March, Oil Secretary R.S. Pandey said on May 13

http://www.bloomberg.com/apps/news?pid= ... VPu2U8tvcU

[copious.abundance]

$this->bbcode_second_pass_quote('AirlinePilot', 'Y')ou just dont understand the problem with reduced costs do you OF???

[jbrovont]

OilFinder - I think it will be hard to pass judgement on oil production projects being delayed as a good thing. Granted, yes reduced production cost is good, but it also shows the producers are betting on a deeper recession coupled with deflation. One of the effects will be that even in the event of a recovery, delayed investment now will equate to less supply later. So yes, I agree that reduced production costs are good news, but with a grain of salt, since by betting on reduced demand, the producers are guaranteeing less supply in the future (thereby probably higher real prices).

$this->bbcode_second_pass_quote('OilFinder2', '')$this->bbcode_second_pass_quote('AirlinePilot', '[')b]Costs Slide Prompts Wave Of Project Delays

"The global financial crisis is poised to cut a swathe through projects throughout the Gulf."

"When a company like Saudi AramcoSaudi Aramco starts to delay project bids, it generally spells trouble for many others and a triple whammy of uncertainties – materials, financing, and oil price – suggests that negotiations on project pricing between sponsors and contractors will become tougher in the months ahead, and that further postponements are likely."

[AirlinePilot]

$this->bbcode_second_pass_quote('AirlinePilot', 'Y')ou just dont understand the problem with reduced costs do you OF???

[copious.abundance]

More "bad" news: Oil sands costs are going down too! We must be doomed!

>>> LINK <<<
$this->bbcode_second_pass_quote('', '[')b]Oil sands catches break from recession
Shawn McCarthy
OTTAWA — From Thursday's Globe and Mail
Last updated on Friday, Jul. 17, 2009 02:32AM EDT

The current slowdown could prove a boon for Canadian oil sands producers, driving down construction and operating costs and giving time for the development of infrastructure needed for the industry's growth.

Signs of a thaw are already appearing, half a year after several companies shelved their most ambitious expansion plans amid diving crude prices and a breakdown of financial markets.

Smaller oil sands companies, including Canadian Oil Sands Trust and Petrobank Energy and Resources Ltd., have been able to raise debt and equity financing to finance their operations.

And larger companies are taking advantage of the hiatus to re-engineer their projects in order to drive down costs and incorporate the latest environmental technologies.

[...]

[AirlinePilot]

$this->bbcode_second_pass_quote('OilFinder2', '')$this->bbcode_second_pass_quote('AirlinePilot', 'Y')ou just dont understand the problem with reduced costs do you OF???

$this->bbcode_second_pass_quote('AirlinePilot', '')$this->bbcode_second_pass_quote('AirlinePilot', 'Y')ou just dont understand the problem with reduced costs do you OF???

[copious.abundance]

$this->bbcode_second_pass_quote('AirlinePilot', 'N')ope, Im trying to get you to think a bit more strategically and your failing in your emotionally charged effort to refute the doomer.

Get away from that and think about it.

[AirlinePilot]

And from the same article above which Oily just posted....

""Low oil prices, steep declines in stock valuations and limited capital for oil sands development have created a ripe environment for mergers and acquisitions [M&A]," its analysts said in the report. However, companies will approach M&A opportunities cautiously, given the volatile nature of the commodity and financial markets. At the height of the boom, CAPP said oil sands production would grow to 3.5 million barrels a day by 2015. It has since revised that forecast to between 1.9 million and 2.2 million barrels a day.

This is the problem your refusing to acknowledge Oily. This is probably optimistic too. Its worse than this article will acknowledge in reality.

[AirlinePilot]

$this->bbcode_second_pass_quote('OilFinder2', 'A')nother lame comeback. Face it AP, that post was an embarrassment. It supports my case, not yours.

[DantesPeak]

Refinery capacity must be increased for two reasons: mostly to process new fields that have low quality heavy oil (especially from Saudi Arabia and Canada), and less importantly, to get refined products closer to their final destination, like India and China, to reduce shipping (bunker oil) costs.

This will result in excess and unused capacity in the US and Europe, which will eventually result in refinery shutdowns there.

Therefore investment in new refinery infrastructure must continue even as total world output falls - if the price of oil remains high. However that necessary investment is being postponed because at $60 oil, it is just not profitable to continue with new investment in most any kind of refineries, or heavy oil fields.

[AirlinePilot]

DantesPeak has a grasp of the concept Oily. It doesnt matter what the demand picture of the moment looks like. What matters is the price of crude over the long haul and what it does to project and infrastructure planning. The current situation may look benign but when you bother to read between the lines and understand what failing investment now means down the road it becomes clear that we are in big trouble.

If you dont grasp that, then i'd suggest you learn to look farther ahead than your cornucopian glasses are allowing you to see.

Volatility is a very bad thing for the energy industry. While Peak is currently being masked slightly, that paradigm wont last forever.

$this->bbcode_second_pass_quote('DantesPeak', 'R')efinery capacity must be increased for two reasons: mostly to process new fields that have low quality heavy oil (especially from Saudi Arabia and Canada), and less importantly, to get refined products closer to their final destination, like India and China, to reduce shipping (bunker oil) costs.

[copious.abundance]

$this->bbcode_second_pass_quote('AirlinePilot', 'A')nd from the same article above which Oily just posted....

""Low oil prices, steep declines in stock valuations and limited capital for oil sands development have created a ripe environment for mergers and acquisitions [M&A]," its analysts said in the report. However, companies will approach M&A opportunities cautiously, given the volatile nature of the commodity and financial markets. At the height of the boom, CAPP said oil sands production would grow to 3.5 million barrels a day by 2015. It has since revised that forecast to between 1.9 million and 2.2 million barrels a day.

This is the problem your refusing to acknowledge Oily. This is probably optimistic too. Its worse than this article will acknowledge in reality.

[AirlinePilot]

Oily, how long do you think that chart will look like that?

Seriously?

[copious.abundance]

Dunno. Most major oil companies think US oil consumption peaked in 2007. Maybe they're right. If they are, a lack of an additional 2 million bpd or thereabouts from Canada by 2015 won't be a big deal.