Higher global energy needs are likely to boost long term growth in expenditure for exploration and production in the offshore oil and gas industry.
Rising energy demand will underpin long-term growth in the industry’s expenditure for the global offshore oil and gas sector, John Westwood, Group chairman of consultancy and information services company Douglas-Westwood told participants at the OSEA Conference held in Singapore in early December.
The firm projected that the industry would spend around $1.4 trillion on offshore exploration and production (E&P) between 2014 and 2018 in order to meet global oil and gas demand. The forecast was made before the Organization of Petroleum Exporting Countries (OPEC) decided at its recent Vienna meeting to maintain production at 30 million barrels per day despite falling crude oil prices.
It remained “too early to say how much [of the expenditure] may be postponed in 2015 … The big projects offshore are likely to continue pretty much untouched,” Westwood said.
Some market players have urged the industry to seize opportunities provided by lower oil prices, which have fallen from a high of around $110 a barrel earlier this year to around $64 a barrel Dec. 10, to create a more stable business model, less vulnerable to oil price cycles.
Lower “oil price is not something to be panicked about … this is a wake-up call for our industry to really move forward,” Matthias Bichsel, a former director of projects and technology at Royal Dutch Shell plc, told the Eighth International Petroleum Technology Conference (IPTC) in Kuala Lumpur, Malaysia.
Industry Needs to Meet Energy Demand Growth
Irrespective of oil price, the International Energy Agency (IEA) projects that worldwide energy demand will grow by 37 percent to 2040, or at an annual average growth of 1.1 percent, according to the Paris-based organization’s World Energy Outlook 2014 (WEO2014) released in November.
“Demand for oil rises by 14 million barrels per day, to reach 104 million barrels per day in 2040 … global gas use continues to grow, with demand of 190.62 trillion cubic feet [5.4 trillion cubic meter],” according to WEO2104.
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