Caution the watchword

E&P expenditure is not keeping pace with robust oil prices, with the majors preferring to plough income back to their shareholders. Unless some new elephant fields emerge, capex will remain tight, reports James Gavin

IN LIGHT OF the robust oil-price, BP took a major step by raising its reference price to $20 a barrel from $16/b late last year. Others followed suit, Statoil raised its base assumption on which a project is assessed over the long term to $22/b, from $18/b. Marathon and ConocoPhillips already project on the basis of $21/b WTI. Yet these price estimates are only half the trading price of crude. Despite being awash with income generated by plus-$40/b prices, oil companies are showing little inclination to indulge in upstream spending sprees. Big oil remains cautious, opting to plough back earnings to shareholders, rather than channel it into what are often risky projects. BP has launched share