GE Oil & Gas CEO Lorenzo Simonelli said Monday that his firm still "feels good" about prospects over the longer term in spite of a potential slowdown in capital spending during the short-term signaled by certain European oil and gas majors in recent months.
Speaking to the press at the 2014 GE Oil & Gas Annual Meeting in Florence, Italy, Simonelli was responding to a question about how recent capital spending announcements from European majors such as BP and Royal Dutch Shell might affect GE's business.
Shell announced Thursday that it would be making "hard choices" about new projects in 2014 and would reduce its capital spending to around $37 billion compared with $46 billion in 2013. This followed BP's announcement in its third-quarter results at the end of October that it would keep a lid on capital spending in 2014, issuing guidance that it would spend no more than $25 billion on capex during the year instead of the $24-$27 billion it had previously indicated.
"First of all it's important to state that GE obviously looks at things from a long-term basis and we feel good about the macro prospects of this industry and also the aspects of the macro environment within the oil and gas sector," Simonelli said.
"Relative to some of the volatility that’s out there in the short term with some of the statements that have been [made] by some companies, clearly they've got to manage their portfolios. We still see that there are growth opportunities and that there's going to be spending taking place. Will it be to the same extent as in the past? Maybe not. There may be a partial slowdown but there will still be positive growth, just not to the same degree as in the past and projects may be taking a little longer.
"But we still feel good about prospects on a longer-term basis and there’s going to be a demand out there."
Simonelli also pointed out that demand comes not just from international oil companies but from national oil companies and independents.
GE kicked off its conference Monday by announcing a flurry of deals with companies as diverse as Chevron, Total and North Atlantic Drilling.
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