Colver Technologies says it expects oil majors to continue to cut capital expenditure next year as oil glut persists.
Colver Technologies reports that it expects major oil companies to continue to cut capital expenditure in 2016 as the global oil supply glut shows no signs of ending. Most large oil companies have been feeling the pain as revenues and profits tumble against a backdrop of oil prices at below $50 a barrel.
OPEC (Organization of Petroleum Exporting Countries), which produces 40% of the world’s oil, continues to pump far more crude than the market can absorb resulting in a supply glut. The group is vying for market share at the expense of price in order to reduce the threat from high-cost producers like the shale oil companies in the US and elsewhere.
It hopes that by exerting downward pressure on prices, the high-cost producers – who need oil prices north of $60-70 a barrel to be economically viable – will be forced to reduce production or go out of business.
“The big players in OPEC show no sign of blinking just yet and the oil majors can sense that,” said Gus Stuyvesant, Colver Technologies’ Chief Operating Officer. “With that in mind, they’re ensuring they remain profitable by reducing investment in exploration, mothballing rigs and laying off thousands of highly-skilled workers until they get some indication that either prices are heading back to sustainable levels above $70 a barrel or until OPEC’s strategy pays off,” he explained.
Asked if the reduction in capital expenditure could jeopardize the potential deal Colver Technologies’ is negotiating with a European-based oil major, Stuyvesant said it was unlikely. “They have certain imperatives that must be addressed regardless of what they can sell a barrel of crude for. We’re their best chance of addressing those imperatives; that we’ll enable them to do it and make a profit at the same time makes it highly likely the deal will be done,” he concluded.
About Colver Technologies
Colver Technologies’ modular GTL systems revolve around the Fischer-Tropsch reactor, a conversion technology developed in the 1920s by Franz Fischer and Hans Tropsche in Germany in 1925. It facilitates the production of significantly cleaner-burning liquid fuels like diesel and jet fuel from natural gas that contains no sulfur. We are committed to doing our part to drive uptake of GTL fuels as global efforts to reduce emissions increase and have invested heavily to ensure the continuing development of this highly attractive alternative to conventional energy production.
Contact Colver Technologies:
Longzhimeng Asia-Pacific Center
22 Pangjiang Street
Dadong, Shenyang, Liaoning