Oil Majors Fail To Find Reserves To Counter Falling Output

Oil executives play down worries about the sector's fundamental health. They say lower production reflects an increased focus on returns, rather than output for its own sake, while falling reserves figures can be misleading.

"These (2014) reserve replacement numbers are a little lumpy... I am not too alarmed about this year's down(turn)," BP boss Bob Dudley told reporters this week.

However, even executives accept that excessive pruning of investments can cost them barrels and profits in the long term.

"Many of the things that you may do out of excessive prudence basically means that you lose them (the opportunities). They won't come back anymore," Shell CEO Ben van Buerden told investors last week.

Van Buerden said he would cut less than rivals to ensure he did not crimp Shell's long-term prospects. Similarly, Exxon told investors on Monday that while it would monitor spending closely, it would not "forego any attractive opportunities".

Nonetheless, Shell has shelved projects and put off $15 billion of spending it might have committed to over the next three years. Analysts at Jefferies predict Exxon will announce a 13 percent drop in capex when it presents its strategy plans in March.

Martijn Rats, head of oil companies research at Morgan Stanley in London, said in a research note this week that overly aggressive cuts could have long-term repercussions.


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