Downturn leads Husky to defer offshore China gas project

March 13, 2020
More independents have promised to review their expenditure in response to the sudden oil price events.

Offshore staff

HOUSTON/LONDON/CALGARY – More independents have promised to review their expenditure in response to the sudden oil price events.

Husky Energy said it would defer by a year development of the block 15/33 oil field offshore China, and the company has also put the brakes on developing the MDA-MBH gas field offshore Indonesia.

However, work is progressing as planned on the Liuhua 29-1 field for the Liwan Gas Project in the South China Sea, with first production expected by the end of 2020.

Overall, Husky said it would reduce its 2020 capital program by $900 million.

Noble Energy plans to scale back its planned 2020 capex nearly 30% to $1.1-$1.3 billion.

However, the company talked up the positives of bringing onstream the Leviathan mega-project at the end of last year, as this is providing greater certainty of cash flows and improves the company’s annual production decline profile.

Noble will complete pipeline expansion work in Israel and is continuing to progress the gas monetization project for its Alen field off Equatorial Guinea, with first production expected in early 2021.

Premier Oil, which recently agreed to acquire various UK North Sea production interests from BP, is looking at ways of reducing its 2020 capex program.

An initial review suggests at least $100 million of savings and deferrals is achievable with potential for further reductions. Assuming a $35/bbl oil price for the remainder of the year, the company said it would expect to be broadly cash flow neutral throughout the year (not taking into account positive cash flows from the proposed UK acquisitions or potential disposal proceeds).

Bahamas Petroleum Co., which has been preparing to drill its first exploratory well off The Bahamas, said if current negative developments forced a postponement of Perseverance #1 from the planned spud date in June, the next practical window would be from mid-October onwards (after the peak-risk period of the hurricane season in the Gulf of Mexico area).

The company stressed that this is not its planning objective, but that it needs to put in place a realistic “back-up” plan to meet its primary license obligation of an initial exploration well in 2020.


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