Big oil companies are resuming ambitious offshore projects, but this time they are keeping spending in check, as investors urge them to avoid a repeat of their overspending in the last oil rally.
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Big oil companies are returning to ambitious offshore projects that languished during the slump in crude prices, but they are working on tighter budgets as investors urge them to rein in spending. About 30 major new projects are expected to launch in 2018, more than double the average annual number approved in the global oil industry for 2014 through 2016, according to Wood Mackenzie, the Scottish energy consultancy. They are likely to include multibillion-dollar developments off the coasts of the U.S., Brazil and Nigeria, as well as newer oil frontiers like Guyana. A similar number of projects got a green light from management in 2017, with a flurry of approvals coming in December, the consultancy said. The trend marks a turnaround for the oil industry, which spent three years delaying major investment after the steepest oil-price crash in decades. Yet it isn’t expected to mark a return to the over-budget megaprojects that characterized the years of $100-a-barrel prices before the downturn began in 2014. New projects must be able to compete with shale developments in the U.S., whose costs dropped faster than elsewhere in the industry and which have lured many companies with the promise of swift returns. In a sign of the attraction of high-quality shale acreage, along with business-friendly policies in the U.S., Exxon Mobil Corp. XOM -5.77% said Monday it plans to spend $50 billion to expand its U.S. business over the next five years. Investing Again The oil industry is returning to major offshoreprojects, but with spending in check. Average capital spending per major* project Source: Wood Mackenzie *More than 50 million barrels of commercial reserves.†Estimate. 2010-13 2014-16 2017 2018† $0 billion $2 $4 $6 $8 $10 Some other oil companies remain more circumspect about their spending on exploration and production.
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