'Selfish' oil firms relish new production despite glut

* New fields to add 3 mln bpd of oil in 2016 - Rystad

* More than $220 bln of projects scrapped since 2014

* New production to delay market rebalancing

By Ron Bousso

LONDON, Feb 18 (Reuters) - As oil firms scrap dozens ofbillions worth of mega projects essential for supplies indecades ahead, fresh output from huge fields already beingdeveloped is set to weigh for many more months on an oil marketstruggling to shake off a glut.

A collapse in oil prices over the past 20 months to below$30 a barrel has taken a heavy toll on production around theworld, reversing spectacular growth in U.S. shale oil andhalting plans to develop costly and complex fields deep inoceans or treacherous seas such as the Alaska Arctic.

But companies that have been investing often more than $10billion in projects that were approved in the first half of thedecade, when oil fetched in excess of $100 a barrel, are pushingahead with many of their developments.

These include the TEN field off the coast of Ghana, operatedby British company Tullow Oil, which is set to startproduction in the middle of this year, expansions at Chevron's Jack/St Malo field in the Gulf of Mexico and at Cenovus' Foster Creek oil-sands field in Canada.

Around 3 million barrels per day (bpd) of oil production isset to come on stream in 2016 from projects whose developmentstarted as early as 2013, according to Oslo-based consultancyRystad Energy.

These projects will add a further 1.5 million bpd in 2017,with around two-thirds of the production coming from offshoredevelopments.

'SELFISH'

Patrick Pouyanne, chief executive of French oil major Total, was unapologetic about boosting his production bymore than 9 percent this year even as the world faces a hugeproduction overhang.

"We are all still investing in projects we decided in2012-2013 and 2014. These projects will be put in production in2016, 2017 and still 2018," Pouyanne said last week at theInternational Petroleum Week conference in London.

"I am not sure we participated in the stabilisation of themarket, but you know, there is only one good reaction when youface a crisis, that is to be selfish and produce as much cash asyou can."

Total in recent years began production from the CLOV fieldoff Angola's coast, in which BP, Statoil andExxon Mobil are partners. It is on track to launch theultra-deepwater Kaombo project, also in Angola, in 2017.

In January, Anadarko started production from itsHeidelberg project in the Gulf of Mexico which was discovered in2009 and started development three years later.

The U.S. Energy Information Administration expectsproduction in the Gulf of Mexico to rise from 1.5 million bpd in2015 to 1.8 million bpd in 2017, offsetting some of the declinesin shale oil production.

The ramp-up of production from projects is equally vital forthe host nations, particularly economies that depend heavily onoil revenue such as Angola, Nigeria or Mexico, where nationaloil companies are partners in the developments.

The vast majority of the world's projects of over $1 billionare formed by joint ventures between international and nationaloil companies, according to data from consultancy EY.

CORRECTION UNDER WAY

With more than $220 billion of oil and gas projectscancelled or put on hold since the start of oil's price declineand companies slashing spending plans, a correction in globalsupplies is under way, Rystad Energy head of analysis Per MagnusNysveen told Reuters.

Production from mature fields is nevertheless set to declineby around 3 million bpd this year due to natural field declineand lower investment.

"Behind the scenes there is a lot of correction going onbecause old producing fields are declining faster than they usedto because there is less drilling," Nysveen said.

Global oil production is expected to align with demandtowards the year-end as U.S. shale output declines, even thoughthe world will continue to store unwanted barrels for the restof 2016, the International Energy Agency says.

That means the rebalancing is taking far longer than mostOPEC members had anticipated when the exporter group's leaderpushed through a strategy in late 2014 to maximize output anddrive higher-cost producers out of the market.

New production is likely to delay the rebalancing further,analysts at U.S.-based investment bank Evercore said.

"While ultimately lower upstream (oil production) capitalwill drive lower aggregate supply, evidence suggests thebalancing point is shifting to the right," Evercore said.

This sets "a challenging environment for the market toquestion the sustainability of demand trends, and (is) likely areflection of today's market reality, in our view".

(Reporting by Ron Bousso; Editing by Dale Hudson)