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Spending on oil and gas projects collapses

Times Online
The Times
December 4, 2008

Schlumberger suffers as demand hits global projects

Schlumberger, the world’s largest oilfield services company, said yesterday that its 2008 profits would fail to meet expectations, blaming a rapid slowdown in the global economy and its impact on spending on oil and gas projects.

Schlumberger, which is based in Houston, Texas, helps private and government-owned companies to drill for and produce oil and gas. It employs 84,000 people in 80 countries. In a trading update, Andrew Gould, the chairman and chief executive, said that results had been hit by a “severe global economic downturn”, forcing many of its customers to delay or scrap multibillion-dollar investment programmes.

The shares slipped 11 per cent to $39.03 in afternoon trading in New York, but Mr Gould insisted that the outlook remained robust. “We still maintain that in the longer term the fundamentals of our industry are sound,” he said.

A collapse in the price of crude oil and the turmoil in global financial markets has prompted energy companies to delay or scrap big investment projects around the world. The group’s full results will be published on January 23.

A string of oil companies have announced delays and cancellations to big oil projects in recent weeks, reflecting a drop of about $100 in global crude prices since July. This week it emerged that Royal Dutch Shell had shelved plans for a $3 billion (£2 billion) coal-to-liquid fuels project in Australia. Last month the group announced a delay to the expansion of its oil sands mining project in Northern Alberta, Canada.

Saudi Aramco, the world’s largest oil company in terms of production, scrapped plans to upgrade its onshore Dammam oilfield at a cost of $1.2 billion last month. A number of marginal, smaller projects in the British sector of the North Sea are also believed to be under threat.

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