* Nine oil majors' output up a combined 8 pct this year
* The increase is equivalent to about 10 pct of world output
* Growth set to slow as spending is cut
By Ron Bousso
LONDON, Oct 30 (Reuters) - After years of declining output,major oil companies have ramped up crude production this year,just as they are being battered by a plunge in prices due toalready excessive supplies.
Executives have taken pride in seeing billions worth ofinvestments in new technologies and new fields in places such asBrazil, the North Sea and West Africa kick in and boost output.
But most of the investment was made three to five years agowhen oil was about $100 a barrel, around double current levels.
Now, the new production is contributing to a glut in supplydue mostly to the North American shale boom, a faltering globaleconomy and OPEC's decision not to cut output.
Recent third-quarter results show the scale of the problem.
According to Reuters calculations, oil production from nineof the world's largest oil and gas producers rose a combined 8percent in the first nine months of the year to over 10 millionbarrels per day (bpd) for the first time since 2013.
With low prices pushing some companies into the red, oilmajors have had to sharply cut costs and rein in growth plans.
"The priority for these companies is to achieve cash flowneutrality and investment will be pulled back in order toachieve that where possible," said Tom Ellacott, Head ofCorporate Upstream analysis for Wood Mackenzie.
"While the majors have better capacity to invest through thecycle due to their financial strength, only the best projectsthat achieve economic hurdle rates at low prices will get thegreen light from the international oil companies."
SURGE IN OUTPUT
The figures include Exxon Mobil, the world's largestpublicly-traded oil company, which said on Friday its productionleapt 10 percent over the nine months to 2.3 million bpd, butthat its third-quarter profit nearly halved.
The additional output from the nine oil majors equates toabout 10 percent of global production, with the InternationalEnergy Agency putting world oil supplies at nearly 97 millionbpd in the third quarter.
France's Total saw a 21 percent increase in oiloutput in the nine-month period to 1.232 million barrels per dayon the back of start-ups and ramp-ups including the CLOV projectin Angola and the West Franklin Phase 2 in the UK North Sea.
For BG Group, 2015 marks a record production yearafter starting key offshore platforms in Brazil, a majordeveloping basin where Royal Dutch Shell is seeking tobecome the biggest foreign operator through its proposed $70billion acquisition of BG.
"We're pleased with the ramp-up, this is strong growth inproduction from our investments," BG Chief Financial Officer,Simon Lowth, told journalists on Friday.
"Over the next few years we're going to see their continuedramp-up and our portfolio moving to an increasing base of lowcash costs capex."
BAD TIMING
Global oil output this year is expected to rise by a record2.4 million bpd from 2014, driven mainly by U.S. shale oiloutput, Iraq production and Brazil, according to Wood Mackenzie.
The growth outstrips an estimated increase in demand ofnearly 1.5 million bpd, it said.
"Operationally, production performance has generally beenstrong," Wood Mackenzie's Ellacott said.
But it is not only new production. Oil companies have inrecent years invested in technology to squeeze the maximum outof existing fields.
The natural decline rate of oil fields operated by Shelldecreased to 3 percent per year in 2015 from 4.5 to 5 percentseveral years ago, according to Chief Financial Officer SimonHenry.
"It is remarkable to see how the focus on productionexcellence is really beginning to come through and istransforming the quality of the operations," Shell ChiefExecutive Officer Ben van Beurden said during an analyst call.
Oil companies have grappled with the downturn and a "lowerfor longer" price outlook by slashing spending, cuttingthousands of jobs and delaying around $200 billion inmega-projects around the world.
With companies set to cut even deeper over the next twoyears in order to offset declining revenues, production from oilmajors could flat-line or decline, Ellacott said.
(Additional reporting by Karolin Schaps; Editing by MarkPotter)
