As many as 25 upstream projects are likely to reach final investment decision (FID) in the current year of 2017, according to a report.
Compared to 12 upstream projects which had reached FID last year, the current year is likely to witness 100% increase in investment decisions, said the UK-based research company Wood Mackenzie in a report titled "A big year for FIDs: 2017 marks a turning point".
Out of the 25 predicted upstream projects, 15 have already witnessed been santioned by the developers in the first half of the year.
Put together, the projects have around 8 billion barrels of oil equivalent (bnboe) of reserves with a majority of them in brownfield projects on existing fields, subsea tiebacks or satellite developments.
The brownfield expansions are less risky than greenfield projects, says the report. Besides, they would need less capital and can come onstream early while providing a quicker payback and better return of investment.
Last year, the projects that received FIDs amounted to 8.8bnboe of approved reserves.
Oil and gas giants have dominated the FIDs scene in the ongoing year, with eight of the 15 sanctioned projects operated by them.
Wood Mackenzie Asia Pacific upstream research director Angus Rodger said: “These are positive signs that the upstream industry is continuing on the road to recovery and that the more competitive conventional projects are moving down the cost curve sufficiently to attract new investment.”
Since 2015, oil and gas majors have operated 19 out of the 35 mid-to-large sanctioned projects which amounts to under 14bnboe of the 22bnboe approved commercial reserves.
It has been estimated by the research company that the 19 projects by 2024 would add up 1.6 million boe/d of net new production to the oil and gas majors. This would reflect 6% of total output from the peer group.
However, the report says that national oil companies (NOCs) have cut down on their new project investments drastically from 2015, with operations of less than 1 bnboe of the 22bnboe approved commercial reserves.
Image: Globally, 25 upstream projects are expected to reach FID in 2017. Photo: courtesy of suwatpo/Freedigitalphotos.net.