Oil and Gas Optimism Rises for 2019
The industry has finally moved past years of “cautious optimism” to a less delicate approach.
Oil and gas executives are largely optimistic about the 2019 outlook for the industry, reveal findings from a new Deloitte survey.
According to Deloitte’s 2018 oil, gas and chemicals industry executive survey released Oct. 30 during the company’s oil and gas conference, industry executives have a growing optimism in the return of more favorable business environment.
Of the three sectors (upstream, midstream downstream), midstream executives hold the most positive outlook when it comes to capital spending and investment. Seventy-one percent of respondents expect flat to higher capital expenditures (CAPEX) growth, up from 34 percent in 2017.
Upstream growth seems to be the main driver for the change in midstream sentiment.
Rising production in the Permian has helped the U.S. Gulf Coast be identified as a key opportunity for 62 percent of respondents.
In regard to the downstream sector, those executives have a positive outlook with modest growth. Refiners anticipate a strong 2019 with average expected margins of $15.39, up from $13.20 in 2017.
There still lies a bit of uncertainty for some upstream companies, who seem to be more focused on the short-term and medium-term strategies, rather than long-term. However, 61 percent of respondents expect rig deployment to rise, followed by 56 percent each who think exploration spend and headcount will rise. Fifty-two percent anticipate an increase in CAPEX.
“The industry seems much better off than a year ago. Positive sentiments have emerged from all sectors, but the real bright spot is in the downstream and chemical sectors,” John England, partner, oil, gas for Deloitte and Touche LLP, said in a release. “Most upstream executives surveyed see better days ahead but are managing more with caution as they work through growing pipeline constraints, mounting geopolitical tensions and rising oil prices that could also push up costs.”
He added that with growth and technology top of mind, digital technologies could become vital for productivity and profitability.
Survey respondents expressed that the three technologies with the largest impact on the oil and gas and chemicals industry are:
- AI/machine learning and advanced analytics
- Energy storage and efficiency
- High performance computing, cloud, Internet of Things, robotic process automation and digital design
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