UNDER EMBARGO UNTIL 15 AUGUST, 00.01 BST
Top 20 high-cost oil projects risk wasting $91 bln of investor cash
London, August 15, 2014 – The Carbon Tracker Initiative (CTI) today revealed some of the world’s most expensive future oil projects, which the biggest publicly listed oil companies are considering for development. Some of these projects require prices far exceeding today’s levels, and risk wasting $91 billion of investor cash over the next decade if taken into production. The projects are suggested as prime candidates for cancellation.
Following CTI’s carbon cost curve study published in May, institutional investors have been asking for more details and economic justification for projects that require high oil prices to succeed.
Today’s CTI research goes one step further than the May analysis, ranking oil majors according to their capex exposure to undeveloped, high cost projects, and revealing the highest risk projects.
To create shareholder value, oil majors need to reduce exposure to exploration projects requiring the highest oil prices, rather than solely pursue production volume. To help investors, CTI lists the top 20 undeveloped high-cost oil projects, by size. They are primarily a mix of Alberta oil sands and deep water projects in the Atlantic, representing $91 billion of capital (over the period 2014-25), which could be returned to shareholders rather than have oil firms gamble it away.
All the fields require at least $95 a barrel for sanction, and some need prices in excess of$150 per barrel. The global Brent oil benchmark has ranged between $99 bbl and $114 bbl over the past 12 months.