Investment and Development Budgets to Fall by 11%, Says Analysis
Investment and development budgets for upstream in Europe are expected to fall from US$6.9 billion in 2014 to US$5.8 billion in 2015 as a consequence of the drop in oil prices, wrote on Tuesday consultancy Wood Mackenzie.
“Looking ahead to 2015, upstream activity will undoubtedly be influenced by oil prices, and we expect a direct impact on exploration and development budgets - with discretionary spend most at risk. However, with several licensing rounds and high-profile exploration wells expected, it is likely to be another exciting year for the region” James Webb, Manager for Continental & Mediterranean Europe upstream research at Wood Mackenzie commented.
The report said that significant investments in 2014 targeted Hejre and South Arne Phase III project in Denmark, Total’s Tempa Rossa in Italy and OMV Petrom’s offshore project in Romania.
Speaking about production, the report staid that the majority of the decrease in gas production has to do with the decline occurred in the Netherlands.
‘The Netherlands accounted for much of the gas decline as 2014 saw lower production caps being implemented at the country's Groningen gas field. Additional cuts to Groningen will impact production in 2015, but will be somewhat offset by the first volumes from Shell's Corrib project in Ireland which is due to come onstream.’
The analysis also mentioned a revival of projects in Netherlands as a consequence of the E&A activity in the country, which accounted for almost 30% of Europe’s exploration and appraisal wells. European shale gas will bear the brunt of changed market conditions.
‘Unconventional exploration across the region will continue to decline in 2015 following a number of high profile company exits from Poland such as Eni, Marathon and Total, as well as disappointing well results last year. Key regional hotspots are likely to emerge in 2015, with high impact conventional exploration in the Black Sea, and Eastern Mediterranean, as well as Denmark's first shale well expected to be spudded by Total in early 2015.’
Wood Mackenzie referred to new opportunities coming from Croatia, Denmark and Greece.