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Shell postpones investment on two major oil projects
As oil prices collapse, Shell is postponing the final investment decisions (FIDs) for two planned projects, one in the U.S. Gulf of Mexico and another in the UK North Sea, a source with the supermajor told Reuters on Wednesday.
Shell is now thinking of postponing the FID for the development of the Whale discovery in the Gulf of Mexico, Reuters’ source said. The initial FID timeframe was to make the decision later in 2020, but it is now postponed to 2021.
Shell announced the large deepwater discovery in the U.S. Gulf of Mexico in January 2018, although it had made it six months earlier. Back then, the company said that the Whale discovery was “one of its largest U.S. Gulf of Mexico exploration finds in the past decade.”
Shell is the operator of the planned project with a 60-percent interest, while U.S. supermajor Chevron holds the other 40 percent.
Another offshore area where Shell has a lot of experience and projects, the UK North Sea, could also see a Shell project decision delayed. Shell has decided to postpone the decision for the development of the Jackdaw natural gas discovery, which is planned to be tied back to the Shearwater platform by 2024, the company source told Reuters.
Last month, Shell, like every other oil firm these days, announced significant spending cuts to protect its balance sheet from crashing oil prices. Shell said it was reducing its underlying operating costs by US$3-4 billion per year over the next 12 months compared to 2019 levels. The supermajor will also cut capital expenditure to US$20 billion or below this year, down from originally planned level of around US$25 billion.
Also last month, joint venture partners Siccar Point and Shell UK deferred the FID for the Cambo project in the North Sea to the second half of 2021, from the initial FID target in the third quarter of this year.
Although it is deferring some FIDs, Shell announced last week the final investment decision on the US$6.4-billion Surat Gas Project in Queensland, Australia.
Oilprice.com
