SINGAPORE - The number of upstream oil and gas (O&G) projects sanctioned in 2017 has more than doubled over 2016, but the average capital expenditure for each major project fell to a 10-year low, data released by energy and commodities consultancy, Wood Mackenzie (WoodMac), showed.

WoodMac noted that the average capex for each sanctioned major project fell to US$2.7 billion, compared to an average of US$5.5 billion for the last decade.

The consultancy classifies a project that holds commercial reserves of over 50 million barrels of oil equivalent (boe) as "major".

The lower average project capex observed for 2017 is part of a larger trend towards cost reduction in the upstream O&G industry following a collapse of oil prices in 2014.

Still, WoodMac viewed this as a sign pointing to "an upgrade in industry sentiment" as oil prices rebounding to the US$50 and US$60 ranges saw more projects getting sanctioned on "lower costs, lower breakevens and improved corporate finances".

Principal analyst Jessica Brewer said: "We should continue to see operators favouring a 'leaner and meaner' path in 2018." The first quarter of 2018 ended with six projects already sanctioned, including China's first wholly owned and operated deepwater gas project, the Lingshui field development.

However, the industry cannot rely on small projects forever.

Angus Rodger, Wood Mackenzie research director, noted that the saving grace in this respect, is that "a lot of big projects" have emerged on the horizon, particularly for the liquefied natural gas (LNG) segment.

WoodMac flagged several multi-billion-boe LNG field developments that may materialise in 2019. These include the Mozambique LNG and Canada LNG projects.