Despite the global recession, offshore spending is expected to grow strongly – from $578 billion Capex and $379 billion Opex over the last five years to $807 billion Capex and $549 billion Opex.
Exploration for fresh oil and gas supplies and development of existing and newly found accumulations from demanding reservoirs in new extremes of environment will spending.
These forecasts appear in the updated edition of the World Offshore Oil & Gas Production and Spend Forecast 2009-2013 published by Douglas-Westwood and Energyfiles. The report shows that in 2008 offshore oil production was nearly 10 billion barrels or 34% of total production, while offshore gas production had risen to nearly 6 billion barrels in oil equivalent terms, equaling 29% of all gas production (they stood at 9 billion barrels and under 4 billion barrels equivalent respectively in 2000). Higher oil prices – which are double what they averaged five years ago – stimulated investment leading to equipment and personnel shortages as demand soared. Costs increased for most consumables and services, especially high technology services, in 2005-2007.
“But 2008 saw the beginnings of financial turmoil,” notes report author Dr. Michael R. Smith of Energyfiles. “High prices and economic decline reduced energy demand. Global oil demand, standing at around 85 MMbpd in 2007, declined in 2008 and will decline even further in 2009 – the first time this has happened for two consecutive years since 1983. Oil prices had risen at unprecedented rates from a low of $13 barrel (for Brent in 1998), to an average of $85 barrel in 2008. But the average figures show only part of the picture. The spot price for Brent crude spiked at $143.95 on July 3, 2008 and tumbled to $36 by the end of the year.
“The price volatility immediately led to uncertainty and project delays so that in 2009 we have a period of across-the-board cost deflation. Global upstream oil and gas budgets for 2009 have reportedly been cut by 21% with more than 20 planned large projects postponed. On the other hand, the biggest oil companies only planned, on average, to cut spending by 5%.”
The report projects these cutbacks to be short-lived. Continued increases in oil and gas production, will, after 2010, again drive all industry offshore annual expenditures from over $240 billion in 2008 to nearly $340 billion in 2013. For information or to purchase the report, phone +44 (1227) 780 999 or fax +44 (1227) 780 880.