The number of upstream oil and gas (O&G) projects sanctioned last year 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 (S$3.6 billion), compared with 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 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$50s and US$60s saw more projects getting sanctioned on "lower costs, lower break-evens and improved corporate finances".
WoodMac analyst Jessica Brewer said: "We should continue to see operators favouring a 'leaner and meaner' path in 2018."
The first quarter of the year 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.