After years of reduced spending, executives at the world’s largest oil producers have become under increasing pressure to invest in replenishing reserves in order to take advantage of a boost in prices and prevent declines.
Oil prices have recently reached four-year highs of over $85 per barrel, company boards are being encouraged by drilling companies to drill more, wages are edging higher, service companies suggest rates will have to rise and investors suggest Big Oil will once again start to grow.
However, the heads of companies such as BP, Royal Dutch Shell and Chevron, that have committed to low spending after slashing budgets by up to 50%, the pressure not to spend during such a boom could be difficult to withstand.
There are signs that cost cuts that were implemented during the industry slump, when oil went from $115 a barrel in 2014 to $26 in 2016, are being lifted.
Shell has returned to a rota of two weeks offshore, three weeks onshore in comparison to the more tiring and extended three weeks offshore, four weeks onshore rota implemented during the downturn.
During the shorter rotations, more ships and helicopters need to be chartered but companies are confident North Sea operations will be more productive and cost effective.
Board members of large oil companies have come under increasing internal pressure to invest in projects and acquisitions, according to an executive at a large European oil company.