This week saw two of the largest oil projects approved since the start of the crude price route nearly two years ago. Specifically, Chevron Corp. gave the go-ahead to a $37 billion expansion in Kazakhstan and BP Plc signed off on the $8 billion expansion of a liquefied natural gas plant in Indonesia. Further, Industry experts expect two additional mega projects to get the green light this year - BP’s Mad Dog Phase 2 in the Gulf of Mexico and Eni SpA’s Coral LNG development off Mozambique. Notably, a decline in project expenses combined with crude oils recovery from a 12 year low have emboldened executives to start spending again. BP has knocked more than half the cost off its Mad Dog Phase 2 project. Estimated at $20 billion four years ago, this project is now expected to cost less than $9 billion. Overall, the approval of these mega projects clearly signals that big oil companies are regaining the confidence to make large investments, driven by rising crude prices and low costs that promise to trigger more expansion ahead. Further, these approvals are a signal that big oil companies are more confident in their ability to pay their dividend and more confident in their cash flows.
A Canadian Energy expert