The continued fall of oil prices could lead to postponement of $150 billion worth of projects in the sector worldwide, a Norwegian consulting firm said today.
"Everything will depend on what oil companies decide to do, but if they don't exploit the fields which break even with the barrel above $80, $150 billion will go down the drain," chief analyst at Rystad Energy, Per Magnus Nysveen, tells AFP.
Today, Brent crude fell close to $69 a barrel in London, a drop of 40 percent from June. Falling oil prices combined with high production costs in the sector force oil companies to postpone or even cancel developments of oil finds in order to maintain their cash flow. Norway's energy giant Statoil, for example, has delayed decisions on its Johan Castberg project, a massive off-shore oil field in the Arctic with an estimated 400 to 600 million barrels in which operations are expected to be costly.
"Anything with high costs will be vulnerable: the Arctic, oil sands and small deep-water projects," Nysveen says. "All countries will suffer. Russia will suffer because of the Arctic. Canada and Alaska will suffer ... whereas U.S. shale oil has become less expensive to produce and should therefore not suffer that much."
Rystad Energy refuses to publish its estimates on the future evolution of barrel prices but, according to Nysveen, there are no signs of a pick-up in the near future.
"The offer is really overabundant in the market today and we think that it'll be even more overabundant at the beginning of next year," he says.