‘We estimate that global upstream oil and gas investment budgets for 2009 have already been cut by around 21 percent compared with 2008,’ the report said.
The IEA said that between October 2008 and the end of April 2009 over 20 planned large-scale upstream oil and gas projects — valued at a total of more than $170 billion — were deferred indefinitely or terminated. Those projects occupied around two million barrels per day of oil output and one billion cubic feet per day of gas capacity. A further 35 projects were postponed by at least 18 months.
‘Oil sands projects in Canada account for the bulk of the postponed oil capacity,’ the report said. ‘Investment in non-OPEC countries is expected to drop the most,’ it said, adding that spending cuts on existing fields also risked pushing up decline rates. Investment cuts will only affect capacity with a lag, so in the near term weaker demand was likely to result in an increase in spare or reserve production capacity, the IEA said. But it said that that if the current trend was sustained, there was a danger it could lead to a shortage of capacity and another spike in energy prices once the global economy recovers. ‘The faster the recovery, the more likely that such a scenario could happen,’ it said.
