Massive upstream investment promised to boost reserves.
Major new projects and improved execution records have allowed three of the world’s largest super-majors to announce encouraging results and forecasts to their shareholders.
Although downstream activities play an integral part of the good news, for investors it’s no doubt the reserve replacement success story that’s warranting the feel-good factor in top IOC boardrooms.
Upstream capital projects for Shell, BP and Chevron represent an industry investment of close to $100 billion worldwide.
The huge spend represents unprecedented ventures in countries eager to enhance production capacity to realise their financial potential.
George Kirkland, Chevron’s executive vice president for global upstream and gas, has said projects in Kazakhstan, Nigeria, Angola, Brazil and Tahiti are all expected to increase production capacity this year.
Added to this capacity increase Chevron also revealed a strong 2007 for its exploration program.
“Each year from 2002 – 2007 Chevron’s exploration team has added an average of 1 billion barrels to its resource base, and the 2007 success rate on 41% was in line with each of the preceding 6 years,” explained Kirkland.
Shell have committed to over 50 large projects that it says will underpin its cash flows for decades to come.
“This is an unprecedented phase of activity for the company, leveraging our strong brand, technology integration and scale. We are creating new heartlands for Shell in a new energy landscape,” said Jeroen van der Veer, Royal Dutch Shell’s chief executive.
Major investments underway at Shell include projects that will deliver 1 million boe/d new oil and gas, including 60 000 b/d oil sands production capacity.
BP announced reserve replacement of 112% for 2007, and earmarked a further US$15 billion for expected upstream spend, excluding its investments in TNK-BP and Pan American.
Andy Inglis, BP’s exploration and production chief executive said the company’s E&P investment had paid off with some of the largest discoveries in the world last year.
These results reflect a dynamic response by the IOCs to deal with maturing fields, and limited access to development in the era of national oil companies.
This aggressive upstream investment strategy is paying off for the supermajors, and is sure to provide a steady flow of income to oilfield service firms for years to come.
