In Private Davos Meeting, Oil Chiefs Push Plan to Reduce Costs

20-Jan-2016

The world’s largest oil companies, grappling with lowest crude prices in 12 years, met behind closed doors at Davos in a push to cut costs by standardizing some of the equipment used in exploration and production, according to two people who attended.

The meeting, attended by the heads of Saudi Aramco, BP Plc, Statoil ASA and Repsol SpA, as well as senior executives from Royal Dutch Shell Plc, Total SA and Chevron Corp., is the latest sign the industry is moving away from the bespoke kit designed on a project-by-project basis that seemed affordable during the decade-long boom in prices.

As have prices have tumbled, reaching a 12-year low below $28 a barrel in New York on Wednesday, companies have taken an ax to spending. Investments in oil and gas fields worldwide probably dropped to $572 billion last year, 20 percent lower than the $715 billion spent in 2014, the International Energy Agency, said in November. Spending is likely to drop by a similar amount this year, Fatih Birol, executive director at the Paris-based agency said at the time.

The biggest oil companies believe they can reach a technical consensus with their suppliers so everyone in the industry uses the same kind of kit in some areas, including giant valves and submerged oil well equipment, the people said, asking not to be identified because the meeting was private. (by Javier Blas, Bloomberg)


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