Oil industry cuts US$1 trillion in spending after price drop

The oil and gas industry will cut US$1 trillion from planned spending on exploration and development because of the decline in prices. 22.Jun.16 11:23 PM By Anastasia Sutulova Photo Toinnov.com    512

From 2015 to 2020, the amount of money spent in the development of oil and gas resources will drop by 22 percent, or US$740 billion, in comparison with the expected investment in the development of oil and gas resources before the prices plunged in 2014. Exploration spending will be cut by US$300 billion leading to a three percent lower global production in 2016. The U.S. has demonstrated the biggest cuts in spending. This and next year, forecast investment there is twice as small, showing a drop of around US$125 billion. The Middle East was least affected. For example, it is not expected that investment drops in Saudi Arabia during this year and next. Partly, reduction in spending is connected to the drop in the cost of doing business. This year, such costs in the U.S. unconventional oil and gas industry were four times as small as in 2014. In Russia, the depreciation of the ruble caused 40 percent reduction in investment in dollar terms predicted for the next two years.

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