BAKU, Azerbaijan, Jan. 17
By Leman Zeynalova - Trend:
The 2019 capital expenditures for the majors are expected to meet earlier guidance with 7 percent growth over 2018 at nearly $116 billion, Trend reports citing Fitch Solutions Macro Research (a unit of Fitch Group).
“Final investment decisions to date in 2019 reflect balanced growth with higher margin projects dominating projects receiving investment as natural gas developments and LNG projects begin to form a larger share investments. Expected 2019 projects go ahead though several key projects see delays and FID postponements due to challenging conditions,” the company said in its report.
The report shows that early 2019 capital guidance looks to play out as intended based on third quarter reporting on expenditures.
“BP is expecting to spend just under $16 billion for 2019 which is just below earlier expectations. Shell has reported that 2019 expenditure will come in at the lower end of the $24 billion to $25 billion range. Total is track to spend $18 billion for 20 19 in line with earlier guidance. The US majors Exxon and Chevron book look to match earlier expenditure guidance for 2019 of $34.5 billion and $20 billion respectively. Looking ahead to 2020, capex looks continue to increase and peak as a group, with 2021 expected to decline slightly as current guidance expects a plateau in investment as low oil prices fail to spur increased investment,” said Fitch Solutions.
The report shows that capital investment by the majors held steady over 2019 though lower oil prices are expected to impact returns which could see investment fall in the coming years.
Fitch Solutions expects that lower oil prices will impact the margins of new projects and with decreased exploration, fewer high margin projects will be available for investment.
“Most expected projects through 2019 will go ahead, though several key projects see delays and FID postponements. Several key growth projects for the majors reached positive final investment decisions over the year, led by large investments in LNG liquefaction facilities,” reads the report.
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