• 3 minutes Looming European Gas Crisis in Winter and North African Factor - a must read by Cyril Widdershoven
  • 7 minutes "Biden Targets Another US Pipeline For Shutdown After 'Begging' Saudis For More Oil" - Zero Hedge Monday Nov 8th
  • 12 minutes "UN-Backed Banker Alliance Announces “Green” Plan to Transform the Global Financial System" by Whitney Webb
  • 16 hours Microbes can provide sustainable hydrocarbons for the petrochemical industry
  • 2 hours CO2 Electrolysis to CO (Carbon Monoxide) and then to Graphite
  • 3 hours Hunter Biden Helped China Gain Control of Cobalt Mines in Africa
  • 4 hours NordStream2
  • 22 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 1 hour Building A $2 Billion Subsea Solar Power Cable From Chile To China
  • 4 days Is anything ever sold at break-even ? There is a 100% markup on lipstick but Kuwait can't break-even.
  • 4 days Modest drop in oil price: SPRs vs US crude inventory build
  • 4 days 2019 - Attack on Saudi Oil Facilities.
  • 7 hours "Gold Set To Soar As Inflation Fears Mount" by Alex Kimani
  • 5 days Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 6 days Ukrainian Maidan after 8 years
Cold Blast Sends Power Prices Soaring In Germany

Cold Blast Sends Power Prices Soaring In Germany

Europe's first cold spell of…

WoodMac: Upstream Investment Insufficient To Meet Demand Growth

Despite an uptick in global spending on oil and gas development, the upstream recovery is much slower and shallower than in previous cycles, with current investment levels insufficient to meet future demand growth, energy consultancy Wood Mackenzie said on Wednesday.

Exploration austerity and the cherry-picking of projects will continue to drive the capital budgets of the upstream players globally, at least in the near term, while decision-making will still hinge on a lot of uncertainties, including the price of oil and the pace of the energy transition, Wood Mackenzie analysts note.

According to new research by the energy consultancy, global oil and gas development expenditure will need to rise by around 20 percent in order to meet future demand growth and make sure that oil and gas firms will sustain their production in the next decade.

There is recovery in the upstream market, with spending on development expected to rise by 5 percent in 2018, following a 2-percent increase last year. Yet, “the recovery is much slower and shallower than in previous cycles,” WoodMac notes.

According to the research, investment will tick up to just above US$500 billion in the early 2020s from a low of US$460 billion in 2016. But this US$500-billion spend would still be far below the US$750 billion peak in 2014, according to the consultancy.

WoodMac estimates that annual development expenditure has to rise to around US$600 billion so as to meet future demand for oil and gas through next decade. Yet, it doesn’t expect upstream players to rush to significantly boost investments.

Related: Why U.S. Shale May Fall Short Of Expectations

“Many companies will justifiably be concerned about committing substantial capital to long-term projects with peak oil demand and energy transition risks within the investment horizon,” said Tom Ellacott, senior vice president, corporate research.

“There’s also a prevailing mindset of austerity designed to appease shareholders — investment is lower in the pecking order for surplus cash flow than dividends and buy-backs,” Ellacott added.

A new wave of big liquefied natural gas (LNG) projects is coming, but investment in conventional, deepwater, U.S. shale gas, and oil sands is expected to still be well below the levels before the 2014 oil price crash. The U.S. tight oil patch, led by the Permian, will be the only area bound for consistent growth in investment over the next few years, WoodMac reckons.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News