KATADATA - Many oil and gas companies are cutting their expenses in 2016, which has created a decline in the oil and gas investments to US$ 522 billion. This 12.3 percent drop from last year has made the current investment to be the lowest in the last six years. The research of Wood Mackenzie said that Inpex Corporation is the one company that is experiencing the largest budget cut, which reaches 65 percent.
The cut in investments and operational expenditures is the end result of the plunging oil prices, which has touched US$ 28 per barrel last week. Two international finance institutions, Morgan Stanley and Standard Chartered, have predicted that oil prices will continue to decline this year to touch US$ 20 and US$ 10 per barrel.
Thus, many oil and gas companies started to review their operational activities in order to suppress costs. Wood Mackenzie mentioned that the cut will mainly occur in the operational activities with contractors, and exploration activities that will require large costs like a deep water exploration.