Acergy was awarded a contract valued at approximately $500 million from Chevron Nigeria Ltd for their gas development program in Escravos, offshore Nigeria, in water depths of up to 40 meters.
This engineering, procurement, fabrication, transportation, installation, tie-in and commissioning contract includes the procurement and installation of over 130 km of pipelines, the fabrication and installation of 15 risers and 3 subsea tie-ins and the installation of over 40 crossings. Engineering will commence immediately, with offshore installation due to commence in Q4 2010.
Bruno Chabas, Acergy’s Chief Operating Officer, said, “We are delighted to have been awarded this contract which leverages our strong local engineering and project management skills in Nigeria and further re-enforces Acergy’s strong presence in the upgrade and development of conventional oil and gas fields in West Africa.”
In a related development, Chevron Corp. Chairman and Chief Executive David O’Reilly has warned of a potential oil supply shortfall midway through the next decade that could potentially trigger a substantial increase in prices.
While reiterating Chevron’s 2009 capital spending budget of US $22.8 billion, O’Reilly said there is enough output capacity either on line or coming on line to prevent a supply imbalance in the near term.
But the world could face a supply challenge beyond the next three-to-five years if companies don’t invest enough in production as the global population rises and living standards improve, he said.
“The big issue is, will there be adequate investment during this time, particularly during this economic downturn, to ensure that the capacity is there in 2015 and beyond,” O’Reilly told Dow Jones Newswires.
“That’s the challenge, and the jury is still out on that,” he said, in an interview in Sydney. Before a partial recovery commenced in March, the global economic crisis sent the price of West Texas Intermediate crude tumbling from around US$147 a barrel in July 2008 to below $40 in February 2009, sapping energy companies’ cash flow from sales.
At the same time, tighter credit markets have made it more difficult for companies to access debt to fund growth, even as oil prices have recovered. ConocoPhillips, the third largest U.S. oil company by revenue and market capitalization, announced Oct. 7 it will sell about $10 billion worth of assets and cut capital spending in 2010 by 12% to $11 billion.
The move came after Conoco spent big on acquisitions during the energy boom earlier this decade, a strategy which contrasted with Chevron and Exxon Mobil Corp’s focus on exploration.
O’Reilly said Chevron’s ability to keep a strong balance sheet has given it the power to continue to invest in growth opportunities, with the company’s spending forecast for calendar 2009 of US $22.8 billion in line with its 2008 budget. The outgoing Chevron Chairman and CEO, who stands down at the end of the year, said Chevron expects to release a specific capital expenditure forecast for next year in December or January. â€œI anticipate that we’re going to stay the course, but I can’t say what the specific number is,” he said.
O’Reilly declined to comment on whether Chevron would be interested in buying any assets that ConocoPhillips may put up for sale.
As to its own assets, O’Reilly said the company’s overhaul of its refining and marketing business is ongoing, but he declined to comment on what specific assets Chevron could sell.
He said the company is “almost complete now” in exiting the African markets it wants to exit, and that it wants to remain strong in the North American and Asian refinery and retailing markets.
On the near term outlook for oil, O’Reilly said demand for energy is expected to grow next year and also in 2011, with global demand having recently stabilized.Current demand growth is particularly evident in Asia, he said.