Gas and oil projects to prosper in 2017

Gas and oil projects to prosper in 2017

The recent rise of benchmark oil prices will trigger increased spending in the industry over 2017, with new projects expected to double from numbers in the previous year.

Oil and gas consultancy group Wood Mackenzie has forecasted a 3% rise in exploration and production spending, reaching US$450 billion in total, though this remains 40% below levels in 2014.

This report is another sign that the industry may be exiting a two-year slump where oil prices dropped below $30 a barrel.

But following an international agreement led by OPEC to slash production levels, Wood Mackenzie is predicting 2017 prices to reach an average of $57 a barrel in 2017, gradually increasing to $85 a barrel by 2020.

Malcolm Dickson, a principal oil and gas analyst at Wood Mackenzie, said: “We’ve just come through two years of gloom and lots of costs cutting and now we are cautiously optimistic there will be a start of recovery in 2017.”

Costs related to exploration and production have also fallen since 2014, and are expected to drop by a further 5% this year, allowing for greater project profitability.

Therefore, final investment decisions on large-scale projects will more than double over the next year, according to Dickson.

Notable beneficiary projects of the costs decrease are likely to be Exxon Mobil’s (NYSE: XOM) offshore Guyana discovery and deepwater projects in Brazil and in the Gulf of Mexico.