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Oil giants need to invest 30 bln USD in southern U.S. through 2020: report

  HOUSTON, June 18 (Xinhua) -- Several supermajors in the southern U.S. Permian Basin will need to invest nearly 30 billion U.S. dollars through 2020 to meet oil and gas output targets, according to IHS Markit on Monday.

  The business information provider IHS Markit said in an energy report, released in Houston on Monday, that Exxon Mobil, Royal Dutch Shell and Chevron will need to make the investments in the oil and gas play in coming years to achieve growth targets.

  The report also said that these investments will catalyze cost inflation and gradually force consolidation in the basin, a region located in western Texas and southeastern New Mexico, the United States.

  While there is great optimism about this level of investment in the play, the supermajors' growth plans will naturally enhance execution risk and cause financial stress for smaller E&P (exploration and production) companies, the report said.

  "All the supermajors have a relatively low Permian cost-basis, which was provided by cheap acquisitions of assets prior to the boom in Permian unconventional development. If the return-focused supermajors are to remain committed to the Permian, they must accept the reality of a rapid escalation of their cost-basis that will accompany their medium-to long-term growth plans," said Sven del Pozzo, director of energy equity research and analysis at IHS Markit.