Confidence in the global oil and gas industry for 2013 has increased compared to the previous year – despite multiple challenges facing the industry, according to a new report.
Seismic Shifts, by GL Noble Denton, says the rise in confidence is the third annual rise recorded in its study, following in the wake of the 2010 Gulf of Mexico disaster and the 2008 global downturn.
However, regulation, skills shortages and political instability will be big issues affecting the global oil industry in 2013.
The report, based on a survey of senior executives, says increased regulatory burdens in the wake of the 2010 Gulf of Mexico disaster will remain a “costly impediment to growth”.
Long-running fears over skills shortages will become “an acute barrier to growth” and contract negotiations will get tougher in the year, more so for contractors, due to tightening contract and pricing terms being set by national oil companies, it says.
Of the countries to do business in, Iran and Nigeria were listed as the two toughest, with Iran facing a “persistent risk of military intervention” and Nigeria’s proposed new petroleum bill – in addition to persistent corruption and security risks – causing concerns.
In contrast, the US, with a record rise in oil production last year, was at the top of the most attractive destinations, ahead of Brazil in second.
Top investment destinations (in order):
US, Brazil, Australia, Norway, Canada
Toughest investment destinations (in order):
Nigeria, Iran, Russia, Iraq, Afghanistan, Venezuela
Despite the challenges, as a whole, the industry had “robust confidence”, despite concerns about the global economy, according to the report.
Many see technology and innovation as key to their future growth, plugging skills gaps and meeting the challenges of harder projects.