Energy supermajors Royal Dutch Shell and Total delayed large-scale projects in West Africa. The move will give both companies time to bring down contractor costs.
London, UK | — Energy companies Royal Dutch Shell and Total have delayed large-scale projects in West Africa in light of a global decrease in crude oil prices, Financial Times reported.
Shell has delayed investment on the offshore Bonga South West project in Nigeria until next year. The project is estimated to cost $12 billion. Total has delayed the Zinia two projects in Angola. According to the newspaper, the move will give both companies time to bring down contractor costs.
Shell’s current move follows a January decision cancelling the $6.4 billion joint petrochemical plant construction project with Qatar Petroleum. In February 2015 the company said oil price drops will not result in an abandonment of the Bonga South West project.
Bonga Southwest, Nigeria’s first deepwater development oil well, was launched in 2005. It has produced more than 500 million barrels of oil to date.
Global oil prices have dropped significantly since the summer of 2014. In November 2014, the Organization of Petroleum Exporting Countries (OPEC) decided against cutting oil output levels, a contributing factor to an even faster slump in prices.
The June futures per barrel of Brent Crude Oil dropped to $64 this week as opposed to $115 in June, 2014.Earlier in April, the World Trade Organization (WTO) predicted that oil prices will stand at about $60 per barrel in 2015 climbing to $70 per barrel in 2016.