The oil and gas industry may cancel about $1 trillion of planned projects globally in the next two years due to the fall of the oil price.
This is according to a senior Saudi Aramco executive, who spoke at a conference in Bahrain on Monday, Reuters has reported.
“Challenges during down cycles are more complicated today than before…At this moment the global industry is poised to potentially cancel about $1 trillion in capital funding,” Amin Nasser, senior vice president for upstream operations said.
Speaking to reporters later, Nasser clarified that the $1 trillion figure included projects that might be delayed, not just those that could be cancelled.
“What we’ve heard from the industry is that there is $1 trillion of planned projects that will be dropped or deferred over the next couple of years because of what’s happening,” he said.
Brent oil, the Middle East price benchmark, collapsed from $115 a barrel in June 2014 to around $60 in the past months amid a global supply glut and weaker global demand.
As a result, producers have been looking at ways to reduce cost with some renogiating contracts and even cutting their budgets.
Aramco itself put on hold its deepwater oil and gas exploration and drilling activities in the Red Sea and suspended plans to build a $2bn clean fuels plant at its largest oil refinery in Ras Tanura, accoridng to Reuters.
The company’s chief executive Khalid al-Falih said in January that the company would renegotiate some contracts and postpone some projects because of the price of oil.
