Related Articles
Interview
Forward article link
Share PDF with colleagues

Companies must change their strategy in the downturn

Upstream developments are often troubled by cost inflation and over-runs. SBC’s Eric Janvier* argues that as discoveries become more marginal and oil prices continue to fall, oil and gas companies must take a closer look at project management – and change the way they select and execute project

Megaprojects are intrinsically complex and tend to overrun in all industries. In the last decade, upstream projects have suffered more acutely. The first reason is structural: discoveries became more marginal, increasing the cost per barrel, and projects grew to cost tens of billions of dollars, increasing overruns. According to SBC’s annual Capital Projects survey, exploration and production companies multiplied their investment by four, and at the same time mega-projects over-runs quadrupled. The second reason relates to markets: with a higher oil price, most companies expanded ambitiously, drawing many mid-sized companies into unfamiliar territory. The combination stretched both the suppl

Also in this section
Latest licensing rounds
24 May 2017
The industry's most comprehensive list of current and recent rounds for onshore and offshore licenses
Kuwait's new dynamism
24 May 2017
The country wants to shake off its reputation for delays and energy sector in-fighting
While Opec was cutting...
22 May 2017
The Permian will lead a strong US onshore recovery in 2017, while former stalwarts the Eagle Ford and Bakken struggle to regain their footing