Today's Trends: Lower Spending for International E&P

While U.S. and Canadian exploration and production (E&P) spending this year is expected to grow more than initially estimated, the mid-year update to Barclays Capital Original E&P Spending Survey found that international E&P spending is now expected to rise by nine percent this year, compared to a 10.5 percent increase estimated for 2010 in Barclays' December 2009 survey.

International E&P spending is now expected to rise to $335 billion, according to 151 companies surveyed by Barclays. The downward revision in international spending has been attributed in part to weather-related delays in Russia earlier this year. Russian based companies are now forecast to increase capital spending by about 13 percent this year, lower than the 20 percent increase forecast in 2009.

E&P spending by Latin American companies will be down slightly this year due to PDSVA and PEMEX cutting E&P spending. Venezuelan national oil company PDVSA has reduced its E&P spending by 25 percent, compared to the one percent increase forecast in the Barclays' December survey, while spending by Mexico state energy company PEMEX is down 18 percent compared to a six percent decline estimated in December. In contrast, Brazilian state energy company Petrobras will increase its E&P spending by seven percent this year; spending among Petrobras and other Latin American companies remains in line with December 2009 estimates.

Spending among firms based in Europe, the Middle East and Africa are up slightly from the December 2009 survey, while spending increases among state-owned and international oil companies based in Asia and Australia are slightly down from the December survey.


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