World Video | Defence | Foreign Affairs | Natural Events | Trade | NZ in World News | NZ National News Video | NZ Regional News | Search

 


Oil & Gas Industry rein in on caapital expenditure in 2014

20 January 2014

Oil & Gas Industry To Keep A Tighter Rein On Capital Expenditure in 2014

New report reveals optimism in the sector but caution over rising costs and oil prices

Amid a positive outlook for the industry in 2014, senior oil and gas professionals have forecast tighter monitoring of capital expenditure (capex) this year, according to new research published today by DNV GL, the leading technical advisor to the oil and gas industry. While nine in 10 (88%) respondents to the research are confident about the sector, concerns over rising operational costs, a shortage of skilled professionals and competition from international rivals are causing professionals to focus spending on the projects that will provide the greatest return on investment.

According to the report, the proportion of companies planning to increase investment in new projects has declined by 18 percentage points over the past three years, from a high of 63% in 2012 to just 45% in 2014. For the first time since 2011 and the aftermath of Macondo, overall confidence in the oil and gas sector has fallen – albeit only by one percentage point – signalling a shift in sentiment.

The findings come from a new research report, Challenging Climates: The outlook for the oil and gas industry in 2014, which was undertaken on behalf of DNV GL. The research provides a snapshot of industry sentiment about the year ahead and is based on a survey of more than 430 senior oil and gas professionals and in-depth interviews with more than 20 industry executives.

Key findings include:

• Despite some signs of caution, the overall outlook for 2014 is confident among industry professionals: around nine in 10 (88%) are optimistic about the outlook for 2014

• Respondents expect to keep a closer watch on costs: six in 10 (62%) intend to pressure suppliers to curb cost increases next year, especially across Asia

• Uncertainty over oil and gas prices will be more prevalent in 2014: nearly one in four (23%) of industry professionals thinks oil and gas prices will weaken this year, while 36% remain unsure

The report revealed a number of other findings including the skills issue and related to various regions. More about this here:

Shortage of key skills will be greatest barrier to oil and gas industry growth, new research reveals

North Sea oil and gas investment softens

New report reveals confidence among Asia Pacific oil and gas professionals

New report reveals: North America and Brazil to hold greatest growth opportunities for oil and gas industry in 2014

Elisabeth Tørstad, CEO of DNV GL – Oil & Gas, says: “Oil and gas industry projects are becoming increasingly complex as the industry continues to operate in more challenging environments. The cost of exploration and production is rising, the industry’s pool of skilled professionals is decreasing and companies are feeling greater pressure on their overheads. This is all leading to great focus and a degree of ‘belt tightening’ across the industry with a view to keeping a tighter rein on capital expenditure. Although confidence is still high, for the first time since 2011 and the aftermath of Macondo, overall confidence in the oil and gas sector has fallen marginally, signalling a slight shift in sentiment.

“We’re also starting to see signs of greater consolidation across the oil and gas industry supply chain. Our research gives clear signs that pressure will be put on suppliers to become more innovative, to reduce costs and to show value in 2014 by providing access to scarce, in-demand skills and by demonstrating real quality in the products and services they deliver.”

Greater consolidation
In response to rising costs, operators will seek to rely on larger supply chain partners which are more capable of providing a consistent global service, according to the report. About one in five (22%) survey respondents says that their company will increase its work with larger partners, compared with just 6% in 2012.

Furthermore, more than a third (37%) of operators say that their companies intend to acquire partners with the specialist knowledge and skills they need as they move into tougher exploration and production sites, with almost half (49%) saying they will need to increase alliances with others to share knowledge in order to cope with more challenging environments.

In turn, DNV GL’s research affirms that operators will focus on controlling risks and costs by seeking greater standardisation in their procurement approaches. This gives rise to greater interest in oil companies centralising, standardising and streamlining their supply chain to avoid costs in creating new solutions.

Future investment

The report also reveals that the US, Brazil and Australia are the top investment destinations for 2014, with larger operators seeking to expand into challenging new environments such as deepwater sites in East Africa and the Arctic.

ENDS

© Scoop Media

 
 
 
 
 
World Headlines

 

Russian Hack Job?: White House - Actions In Response To Russian Malicious Cyber Activity & Harassment

President Obama authorized a number of actions in response to the Russian government’s aggressive harassment of U.S. officials and cyber operations aimed at the U.S. election in 2016. More>>


Israel/Palestine: Michael Field - Background To How Israel Nearly Went To War With New Zealand

New Zealand and Senegal managed to get the United Nations Security Council to pass resolution 2334 which said Israel’s settlements in Palestinian territory violate international law and undermine a two-state solution in Israel's conflict with Palestine. More>>

ALSO:


US Indigenous Affairs: How President Obama Has Protected Our Sacred Land

I am very proud to be both Navajo and American. As the President of the Navajo Nation, I’ve dedicated my life to ensuring that, as a Navajo, my story -- and our stories -- are part of our collective American history. Today, I want to share one of those stories with you. More>>

Binoy Kampmark: The Berlin Truck Attack And The Refugee Question

The hard-nosed neo-cons were certainly showing little interest in linking arguments, examining evidence, or even considering elementary logic in the aftermath of the Berlin truck attack near the Gedächtniskirche. With the bodies fresh in the morgue, former US ambassador to the United Nations, John Bolton, peered into the mind of the everyday German, and found teeth chattering fear. More>>


Demonetisation: Gordon Campbell On India’s Huge Socio-Economic Experiment

Without much coverage at all in the West, India has just been engaged for the past few weeks in one of the world’s biggest socio-economic experiments since the Cultural Revolution in China. More>>

Gordon Campbell: On The Death Of Fidel Castro

New Zealand likes to think we played our part – via the 1981 Springbok tour – in bringing the apartheid regime in South Africa to an end… Jacob Zuma treated the death of Fidel Castro at the weekend as an occasion to pay a heartfelt tribute to the thousands of Cuban soldiers who travelled across the world to inflict the first significant military defeat on the forces of white supremacy. More>>

ALSO:

Gordon Campbell: On The US Election Home Stretch

Once again at the business end of a US election, the result will hinge on the same old bits of geography as always: the Five Crucial Counties in Ohio, the Two Crucial Counties in Pennsylvania and the I-4 Interstate Corridor in Florida that runs from Tampa Bay through Orlando to Daytona Beach. More>>

ALSO:

Meanwhile:


Get More From Scoop

 
 
 
 
World
Search Scoop  
 
 
Powered by Vodafone
NZ independent news