A. P. Moller-Maersk’s Maersk Oil unit would have to close some sites and cut operating costs if the oil price remains at its current level, the group’s CEO said in an interview in Danish daily Politiken on Tuesday. Nils Smedegaard Andersen said that if the oil price stays around $60 per barrel it would reduce revenue in the oil unit by a third from the level of 2013.
The current oil slump has almost halved prices since June. “As all costs, except taxes, are fixed it is obviously something we have to take very seriously. And we would have to do some things,” Andersen said. He said he would focus on reducing operational costs and exploration costs, and mainly explore for new oil in areas where production costs would be low.
If the oil price stays at current levels some of Maersk Oil’s existing production sites would also have to be shut down earlier than otherwise forecasted, Smedegaard said. He said, however, that he believed it would be more realistic that the oil price would stabilise at a level between $70 and $80 per barrel. This view is shared by Arab OPEC producers, who expect global oil prices to rebound to that level by the end of next year as a global economic recovery revives demand.
Maersk Oil has a target to produce 400,000 barrels per day in 2020, up from 238,000 bpd in the third quarter this year. “I think it is very important to say to the market and the organisation that we have these ambitions, but also that if they are not reasonable any longer we would have to adjust to the world situation,” Smedegaard said in Politiken. He said in November that Maersk’s investment in Angola’s Chissonga oil field is under consideration as a result of falling oil prices.