The global oil and gas industry could cancel as much as $1 trillion worth of capital funding for projects, research, development and training over the coming two years, a senior Saudi oil official said Monday.
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Amin Nasser, senior vice president for upstream at Saudi Aramco, said the industry risked repeating past mistakes during periods of low oil prices.
"The challenge is to keep investments in research and development constant during a downcycle," Nasser told the Middle East Oil and Gas Show in Bahrain.
"The effects of the reduced investment in the late 1980s and 1990s shows the repurcussions can be long lasting," he added.
Nasser clarified on the sidelines of the conference that the $1 trillion figure he cited was an industry view, and covered spending on projects which were likely to be deferred over the next two years, or cancelled entirely.
A report in mid-December by Riyadh-based Arab Petroleum Investment Corp. forecast Saudi investment to fall to $127 billion over 2015-2019, down from nearly $180 billion over 2014-2018.
The kingdom has delayed two major schemes as it prioritises its spending plans. In January, Saudi Aramco pushed back plans to upgrade the Ras Tanura refinery by at least a year as it attempts to cut spending on the downstream sector.
Aramco is also in talks with Italian engineering company Saipem to reduce costs on a $2 billion contract to build processing facilities at the Khurais oil field.
No decision has been taken yet, but the project's execution could be extended by more than a year in an attempt to save costs, or cancelled completely, sources close to the project said Monday.
The Khurais project aims to add 300,000 b/d of production capacity at the 1.2 million b/d field.