Last year’s revived oil price saw a number of oil and gas projects around the world reach their Final Investment Decisions (FIDs), a crucial phase in a project’s investment and execution, while the outlook for 2019 is that gas projects will dominate the planned FIDs, in anticipation of rising demand for natural gas.
Final investment decisions in oil and gas
The number of FIDs taken on upstream oil and gas projects were up for 2018, particularly in the second half of the year, after a period of oil price rises in the first three-quarters of 2018.
Oil and gas producers pushed ahead with a wide range of development types, such as the Tortue floating liquefied natural gas (FLNG) project in Mauritania and Senegal, the Ohaji North/Assa South conventional gas field in Nigeria, the Aspen heavy oil development in Canada and an expansion to the Greater Mooses Tooth conventional oil asset in the United States.
Other key projects with FIDs planned for 2019 include giant gas fields in Mozambique and Russia, as well as oil developments in Mexico, Brazil and Guyana.
Number of projects with FIDs planned for 2019 by region
Russia and Mozambique have the largest projects with scheduled FIDs in 2019, ranked by recoverable resources. These are primarily gas megaprojects intended to supply liquefied natural gas (LNG) exports, located in Area 1 and Area 4 in the Rovuma Basin in Mozambique and in the West Siberian Basin in Russia.
This trend is reflected in other areas, particularly in the Asia-Pacific region, with major gas developments to feed LNG projects in Australia and Papua New Guinea, and for power demand in Vietnam.
Outlook for FIDs
Globally, gas projects amounted to 70% of the resources in greenfield developments with FIDs planned for 2019.
As the oil price continued to recover in 2018, there was a significant uptick in the number of FIDs sanctioned. Cost-cutting and higher cash reserves from reduced investment over the past few years has led to an increase in FIDs and a more optimistic outlook in the industry, despite the volatile oil price.
The primary challenge for companies making and planning to make FIDs has been to secure funding.
Gas developments, ranging from onshore to ultra-deepwater, are expected to be the primary focus for investment, as demand is forecast to grow significantly from countries transitioning to lower carbon fuels.
Oil developments make up a smaller proportion of planned FIDs, as companies target a select range of projects.