Study: O&G Capex Tighter in 2014

Posted by Eric Haun
Monday, January 20, 2014

New DNV GL 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

Elisabeth Tørstad, CEO of DNV GL – Oil & Gas, said, “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, signaling 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 U.S., 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.

Download a complimentary copy of Challenging Climates from: http://www2.dnvgl.com/2014-challenging-climates.pdf
 

Maritime Reporter October 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Matson Raises Guam, Micronesia Rates

Matson, Inc., a U.S. carrier in the Pacific, announced today that Matson Navigation Company, Inc. will raise its rates for the company's Guam/Commonwealth of the

Shipbuilding Regulations: Cents and Sensibility

Addressing the Jones Act is just one aspect of an increasingly complicated boatbuilding environment. Stovepiped, poorly conceived regulations is another. The sting of the recession is fading,

Ship Broker Clarkson Looks to Acquire Platou

Top ship broker Clarkson is seeking to acquire Norwegian brokerage and investment bank RS Platou for 281.2 million pounds ($441 million) in a deal that would create

Energy

US House to Hold Hearing on Oil Export Ban

A House of Representatives panel will hold a hearing on Dec. 11 to explore whether a decades-old law that prohibits the export of crude oil makes sense in an era of domestic energy abundance.

Energy’s Promising Future Threatened

Unrealistic Fears and Overstated Risks obscure the benefits of new seismic data. The United States stands poised on the edge of a bright energy future. After decades

Pile Testing for Wikinger Wind Farm Launched

In October 2014 the first phase of the pile testing campaign for the Wikinger offshore wind farm project was launched after the site’s geotechnical investigation on the Baltic Sea had been completed.

News

US House to Hold Hearing on Oil Export Ban

A House of Representatives panel will hold a hearing on Dec. 11 to explore whether a decades-old law that prohibits the export of crude oil makes sense in an era of domestic energy abundance.

Bollinger Delivers 11th FRC to the US Coast Guard

Bollinger Shipyards, Inc. has delivered the William Trump, the 11th Fast Response Cutter (FRC) to the United States Coast Guard.   The announcement was made by Bollinger Chief Operating Officer,

Australian Defence Minister Says Would Not Trust Submarine Firm to Build Canoe

Australia's defence minister has said he would not trust state-owned Australian Submarine Corp (ASC) "to build a canoe", fuelling expectations that most work in

Offshore Energy

Pile Testing for Wikinger Wind Farm Launched

In October 2014 the first phase of the pile testing campaign for the Wikinger offshore wind farm project was launched after the site’s geotechnical investigation on the Baltic Sea had been completed.

Damen, Palfinger Upgrade North Sea Jack-Up Rig

With the support of Palfinger systems JUMP technology, Damen Shiprepair Vlissingen has completed an upgrade of a Keppel Fels ‘N’ Class drilling rig, one of the largest in the North Sea,

Vietnam Warship Visits Underscore Regional Tension

Vietnam on Tuesday showed off its two most powerful warships in the first-ever port call to the Philippines but an official said it was not trying to challenge

 
 
Maritime Security Maritime Standards Naval Architecture Navigation Pipelines Ship Electronics Ship Repair Ship Simulators Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1778 sec (6 req/sec)