Oil Firms Seen Cutting Exploration Spending
Oil majors, which have a large resource base to maintain, are suffering the most, as the world is running out of very large conventional oil fields, and access to acreage, particularly in the Middle East, is limited.
That is leaving them with an increasing number of gas projects.
"When you look at the mix of oil and gas of the majors, it is definitely moving towards gas - simply because they can't access conventional oil, which ultimately I believe will have an impact on oil prices," said Ashley Heppenstall, the CEO of Sweden's Lundin Petroleum, which co-discovered Johan Sverdrup, the biggest North Sea oil field in decades.
Prices Down Then Up
Before oil prices rise from a lack of exploration, they are first expected to fall, squeezing margins and forcing further investment cutbacks.
The International Energy Agency sees oil prices down at $102 per barrel next year from the current $108 as several producers ramp up output.
"Oil prices need to remain at elevated levels because there is a risk that a fall in oil prices or a cutback in investments by companies will mean that production growth slows," said Virendra Chauhan, an oil analyst at consultancy Energy Aspects.
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