Wood Mackenzie said yesterday that UK North Sea upstream oil and gas industry capital spending this year would be around £4.8billion, slightly down on £5billion in 2009.
The energy industry analyst and adviser, which has its headquarters in Edinburgh, also forecast that UK North Sea capital spending next year would grow next year to £6.8billion. In a new report Wood Mackenzie said global upstream capital spending in 2010 was likely to exceed £237.5billion. It said this would be up almost £12billion on 2009 but still 10% lower than the historical high of 2008. Iain Brown, Wood Mackenzie’s regional upstream research manager, said: “It is clear from our understanding of operators’ plans that confidence has returned to many regions and sectors of the industry, although this effect is far from consistent across the world.
“The revival is set to continue over the next three years and global spending could recover to 2008 levels by 2012 or 2013. The economic crisis of late 2008 shook the foundations of the global upstream business. Many higher-cost capital projects were delayed, shelved or abandoned, and annual spend dropped in 2009 by more than £34billion.
“Now, just one year on, the industry has proven remarkably resilient. Many plans have been restored or expanded, in the expectation that demand and commodity prices will remain relatively robust over the longer-term.”
Wood Mackenzie’s report shows the most spectacular recovery has been in the US, where total spend should return close to peak levels by 2011, thanks to restored confidence and a renewal of activity in unconventional resources, particularly shale gas. But investment levels will take much longer to recover in some other countries, Mr Brown warned.
“Two of the world’s largest producers, Canada and Russia, were most deeply affected by the global crisis, and upstream spending was reduced by around a third through 2009,” he said.
The report says that more than half of future upstream investment will come from the multinational majors and a range of prominent national oil companies (NOCs) such as PetroChina, where spending plans rank with the largest of the majors.
Halliburton, the world’s second-biggest oil field services company, has plans to increase capital spending next year by about a fifth to between £1.56billion and £1.87billion. The US company said around half the investments would be in international markets.
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