Efficient operations: Further capex cuts anticipated in 2017 and 2018
Conrad Prabhu –
Dec 21: Petroleum Development Oman (PDO) projects investments of around $20 billion being ploughed into its oil and gas operations over the next five years, although capital expenditure is anticipated to be curtailed further in 2017 and beyond, a top official said here yesterday.
Raoul Restucci (pictured), Managing Director, said the majority state-owned company will continue to run a lean and efficiency operation going into 2017, while however keeping activity levels at full tilt.
“As far as the outlook for 2017 is concerned, you are going to see a company performing as well as in 2016 and before,” Restucci said. “We will be focusing on minimising capital requirements, improving efficiency, finding self-reliant ways of funding ourselves, continuing with our LEAN programmes, continuing with our ICV programmes, and so on. So we stay the course on all the key foundations. We are very much excited, and we have a number of opportunities, which we are continuing to progress and deliver.”
Cuts in capital expenditure are expected to mirror those in 2016, the Managing Director said. “We are doing are best obviously to reduce (capex), not only for 2017 but also 2018. But there will be very high levels of activity, and very high levels of drilling. We drilled more than 600 wells in 2016 and we are going doing the same in 2017. So activity wise, we are continuing very strongly!” Commenting on PDO’s share of the 45,000 barrels per day (bpd) output cut that Oman has pledged as part of a global deal to bolster oil prices, Restucci stated: “We will take an equitable percentage; we will review the timing and deliver what the Ministry of Oil & Gas seeks in this regard.”
Significantly, a production cut will pose “no issues” for the company’s operations, the Managing Director noted. “We have a portfolio which is robust and strong.
We are looking at increasing incremental activities but in the short term, if we are requested to cut down a little bit, it’s not going to be an issue. We will only have to optimise the scheduling of our (maintenance shutdown) activities.”
Asked if the company would resort to international borrowings in 2017 as well, Restucci said PDO is currently coordinating with the government on the need for, and the timing of, new debt in the coming year. The company raised around $4 billion in finance from international lenders in June this year.
“We are discussing with the Ministry of Finance the optimum timing (for any new debt). At the moment the ministry is well positioned to secure additional funding, so if they want us to we will, but at this stage we are on standby,” he said, adding that the ministry is well-geared to secure the next round of financing.