Crude oil prices freeze N44tr oil, gas investments
Oil and gas investors around the world may have decided to put over $200 billion (about N44 trillion) investment on hold due to the declining crude oil prices.
Already, companies like British Petroleum, Royal Dutch Shell, Chevron, Statoil, and many other oil and gas firms have are causious to spend on new projects in other to protect investors’ funds.
Indeed, a lot of companies are said to be either cancelling projects or temporarily stopping work due to the slide in oil prices.
Oil prices fell to their lowest point in nearly six months on Tuesday as a meltdown in Chinese equities deepened doubts about the outlook for crude demand in the world’s top commodities consumer.
China’s already volatile benchmark stock index, with a combined market capitalisation of $4.6-trillion, has lost 10 per cent in the last two days of trade.
Brent was down 97 cents at $52.50 a barrel, having hit a session low of $52.28, its lowest since early February, bringing losses for July to nearly 18 per cent.
Brent crude is on track for its longest stretch of daily losses since March, when the price hovered just dollars away from six-year lows.
Many companies across the globe are recording loses and are therefore not willing to commit more fund into the business.
For example, energy major BP on Tuesday reported an almost 64 percent drop in its second-quarter profit adjusted for one-time items and inventory changes, to $1.3 billion. This was due to low crude prices and an $18.7 billion charge related to the 2010 oil spill.
BP’s Chief Executive , Bon Dudley said: “In the past few weeks oil prices have fallen back in response to continued oversupply and market weakness and the recent agreements regarding Iran. I am confident that positioning BP for a period of weaker prices is the right course to take, and will serve the company well for the future”.
Also, Royal Dutch Shell has reported a near 60 per cent slump in first quarter profits after it was hit by the fall in oil and gas prices.
Earnings dropped steeply from $7.33billion ($4.6billion) last year to $3.25billion – though the figure was better than City forecasts of about $2.5billion.
Chief executive Ben van Beurden said: ‘Our results reflect the strength of our integrated business activities, against a backdrop of lower oil prices.
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