Open Access Open Access  Restricted Access Subscription Access

The Oil Price Crash of 2014:Implications for a Multi-Billion Dollar LNG Project


Affiliations
1 Lonadek Oil and Gas Consultants, Lagos, Nigeria
 

The price of oil is probably the single most important economic variable in the global economy. The rapid drop in price of oil in 2014 set analysts and commentators busy, trying to predict its trajectory and implications. More than $150 billion of investments have been cancelled by oil companies in 2015 due to the low price of oil, with more spending cuts to follow in 2016. The oil price decline was supposed to catalyze a transfer of wealth from oil-producing countries to oilconsuming countries. It was estimated that a $10-a-barrel fall in the oil price transfers around 0.5 percent of world GDP from oil exporters to oil importers. The recent oil price collapse has far-reaching implications for capital projects in the oil and gas industry. The impact of a fall in oil price is analyzed for a large capital investment project, involving the construction and operation of a liquefied natural gas (LNG) plant. The breakeven price (BEP) of oil for the project is determined.

Keywords

Oil Price, Global Economy, Mega Projects, Liquefied Natural Gas.
User
Notifications
Font Size

Abstract Views: 185

PDF Views: 0




  • The Oil Price Crash of 2014:Implications for a Multi-Billion Dollar LNG Project

Abstract Views: 185  |  PDF Views: 0

Authors

Uyiosa Omoregie
Lonadek Oil and Gas Consultants, Lagos, Nigeria

Abstract


The price of oil is probably the single most important economic variable in the global economy. The rapid drop in price of oil in 2014 set analysts and commentators busy, trying to predict its trajectory and implications. More than $150 billion of investments have been cancelled by oil companies in 2015 due to the low price of oil, with more spending cuts to follow in 2016. The oil price decline was supposed to catalyze a transfer of wealth from oil-producing countries to oilconsuming countries. It was estimated that a $10-a-barrel fall in the oil price transfers around 0.5 percent of world GDP from oil exporters to oil importers. The recent oil price collapse has far-reaching implications for capital projects in the oil and gas industry. The impact of a fall in oil price is analyzed for a large capital investment project, involving the construction and operation of a liquefied natural gas (LNG) plant. The breakeven price (BEP) of oil for the project is determined.

Keywords


Oil Price, Global Economy, Mega Projects, Liquefied Natural Gas.