Oil and gas experts have stepped back in time, appropriately to the year blockbuster film Back to the Future was released in cinemas, to predict a strengthening of crude prices next year.
Oil’s collapse has delayed $380billion worth of investment on 68 major upstream projects, according to industry consultant Wood Mackenzie Ltd.
Growth in the LNG market is not likely to happen until next year, according to new research on the current marketplace. Wood Mackenzie’s latest review of the global LNG industry found the market was characterised by weak Asian demand last year, with a year on year decline of 2%. Many LNG players are said to have shifted their focus from developing markets and have been employing new regasification capacity as a result.
The ramping up of tension between Saudi Arabia and Iran makes it highly unlikely Saudi Arabia will cut its output to help Iran regain market share, according to Wood Mackenzie.
Wood Mackenzie said the global decline in oil price has had a “transformative” impact on the oil majors. Analysis by Wood Mackenzie identified four key themes which will continue into the next year in terms of companies’ budgets and strategies. Tom Ellacott, head of corporate upstream analysis, said key trends for oil majors already identified included weak financial performance in the third quarter of the year, a boost in production levels, deep cost cutting and tighter allocation on limited capital.
Wood Mackenzie said exploration and production companies in Africa will need to bring project costs down even further and find a "smarter" way of working. The company said Africa’s host government have a key role to play in ensuring that local content requirements are reasonable and fiscal terms are competitive in order to attract investors and unlock new project sanctions. Only one third of the continent’s pre-sanction projects have been estimated as economical at less than $50 per barrel.
Oil and gas experts expect European crude demand to grow as a result of the economic agreement struck between the EU and Greece yesterday. The deal has reduced the prospect of a so-called Grexit from the eurozone. In its latest review of the market, Scottish consultancy Wood Mackenzie (WoodMac) said: “If Greece remains in the eurozone and the current crisis is contained, the outlook for Europe's oil demand is much improved over the decline seen in 2014.
More than half of the £120billion due to be invested in the Norwegian North Sea in the next decade will be spent boosting oil recovery from existing fields, according to new analysis prepared for ONS 2014.