Oil industry faces another year of investment cuts

Oil giants are expected to further increase debt to preserve dividends as the price of a barrel of crude oil scrapes along below $40.

Worldwide oil and gas investments are forecast to slide to a six-year low in 2016 of $522bn, following their 22% fall to $595bn last year, Oslo-based consultancy Rystad Energy said.

"This will be the first time since the 1986 oil price downturn that we see two consecutive years of a decline in investments," Bjoernar Tonhaugen, vice president of oil and gas markets at Rystad Energy, told Reuters.

Speaking to the BBC on Saturday, BP boss Bob Dudley also predicted struggling oil producers will suffer even more pain in 2016, foreseeing further plunges in oil prices.

"A low point could be in the first quarter," Dudley said, though he predicted that prices could stabilize toward the end of the year but may not recover for a while.

"Prices are going to stay lower for longer we have said it and I think we are in this for a couple of years. For sure there is a boom-and-bust cycle here."

However, Dudley said a more natural balance between supply and demand could come back in the third and fourth quarter of this year after which stock levels could start to wear off.

After slumping over the course of the 2015, oil prices fell further since 4 December when the Organization of the Petroleum Exporting Countries (Opec) decided against limiting production.

Potentially adding to the supply worries was December's move by US Congress to end the 40-year-old ban on exports of crude oil produced in the country.