(Corrects MARCH 23 story to identify consultancy, paragraph)
OSLO, March 23 (Reuters) - Spending on new oil and gas
projects could fall by more than two thirds this year if oil
prices remain at the current levels, the Oslo-based Rystad
Energy consultancy said on Monday.
Crude oil prices dropped more than 60% since the start of
the year as demand fell due to travel and business restrictions
to stem the spread of the coronavirus, while Russia and Saudi
Arabia ended an agreement to curb production.
Investments are likely to fall to $61 billion or by 68% if
the Brent crude price stays at around $30 a barrel, and to $82
billion, in case the price rises to $40 a barrel, compared with
$192 billion spent in 2019.
North Sea oil was trading at $25.7 a barrel by 1533
GMT on Monday.
"Upstream players will have to take a close look at their
cost levels and investment plans to counter the financial impact
of lower prices and demand," said Audun Martinsen, head of
Rystad's energy service research.
"Companies have already started reducing their annual
capital spending for 2020," he added.
Anglo-Dutch major Shell and Norwegian independent
oil firm Aker BP, 30% owned by BP, said on
Monday they would cut capital spending by 20%.
French energy group Total said the company would
seek to reduce total spending by more than $3 billion, including
$2.5 billion to come from exploration and
production.
Rystad said it still expected major projects, including
ExxonMobil's Greater Liza development off Guyana, to be
sanctioned this year.
The majority of the producing North Sea oil and gas fields
could make money at $30 a barrel of oil thanks to improvements
made since the last market downturn in 2014-16, but most yet to
be approved projects were at risk, consultancy Wood Mackenzie
said in a note on Monday.
"Most FIDs (final investment decisions) for 2020 are off the
table. At current prices, nearly two-thirds of development spend
could be wiped from our forecast over the next five years,"
Neivan Boroujerdi at the consultancy added.
(Reporting by Nerijus Adomaitis, editing by Ed Osmond)