Low price force oil companies to cancel major projects

Continuing decline in oil prices caused the suspension or cancellation of many oil projects in many locations in the world where energy companies to quickly adapt low prices.

New York Times said that it would halt projects to reduce oil supplies in the world in future. Analysts say it will lead to the return of prices to rise if the restoration of global economy recovered.

 
This has made the turmoil in oil markets, prices are rising and falling dramatically that it is difficult for companies planning for the future. As a result, been reduced exploration expenditures, which had reached record levels this year.

 
Although this pattern of oil industry has become known, developments came fast this time.

 
In last June some analysts predicted oil prices to reach to 200 $ a barrel and oil companies sought exploration in various parts of the world did not know the extent to which will fall in oil prices.

 
President of Cambridge Energy Research Institute Daniel Yergin said the prices down very quickly what caused the shock of the supply system.

 
New York Times added that the list of projects that had been deferred is increasing every week. It is currently closed wells in the United States and delaying the establishment of refineries in Saudi Arabia, Kuwait, India and the review of projects to explore for oil on the coast of Africa.

 
The increased investments in alternative energy sources such as biofuels in recent years, but might be reduced significantly if the decline in oil prices. Banks have become reluctant to give loans especially for renewable energy projects in a time of declining oil prices mean lower profitability of such projects.

 
An analyst for Cambridge Energy Research Institute of Energy Peter Jackson said that the delay in the implementation of energy projects may prevent four million barrels per day of access to markets in the next five years.

 
One of reasons leading to the speedy elimination of projects that cost is still high despite low oil prices. The company expects the cost reduction before deciding on other projects.

 
Officials say that energy companies to reduce spending is essential under the current circumstances.

 
PFC Energy Advisory Foundation says the overall investment in the energy sector in the world in 2007 amounted to 329 billion dollars. Marvin Oodam vice president of exploration and production company in industry said that Shell now in unwind, but when the global economic situation to recover, it will return to face the challenges again.
But analysts warn that the world can not afford the continuing decline in investment in energy supply.

International Energy Agency said that the world needs to be 12 trillion dollars to increase oil and gas production to match the increase in population and needs implications.