As a technical advisor to the global energy industry, DNV has conducted a survey covering nearly 800 oil and gas professionals from the top, medium and smaller firms who have their annual revenue ranging from $500M or less, up to $5B or more.
Major oil companies and other oil majors have been cutting their capital spending and outward costs since 2016. This has been a trend which has taken place after Brent crude oil prices fell into a 12-year low, which is below $30 per barrel.
In 2018 oil prices finally recovered to an average of $70 per barrel after the Organization of the Petroleum Exporting Countries and the allies cut their production for an extended period. DNV's annual report of global oil and gas showed over 70% of respondents who are planning to increase their capital spending for 2019. This figure is nearly double that of 39%, which was spent on capital in 2017.
While entering this new phase, the oil and gas industry is renewing the optimism that is around the sector. There is a good sense of resilience within the industry and this resilience comes from the different options that are available in the landscape with regards to technology.
It is true that the industry is laden with ambiguity, more than ever today. There have been rises and dips in the oil market almost every quarter, apart from the usual problems with explorations that have plagued the industry for a decade now. Despite these shortcomings, there is renewed focus and confidence in the ability to cope with the instabilities in the market. The industry leaders are looking much more positive owing to the growth that can be achieved and the possibilities that they can see in these difficult years ahead.
This increased optimism has harboured in new challenges that have plagued the industry. A level of efficiencies must be maintained in the industry in order to revert the downturns in the market. Once the cost control paradigm has been relaxed, the sector will look at testing efficiencies better and experimenting with newer technological environments. Recently, there have been signs of supply chain inflation that needs to be cut apart from addressing skills shortage supplies.
Furthermore, digitalization, data sharing, integration and cloud-based applications remain the top priorities in the sector. More companies are also shifting and preparing for a long-term cleaner energy shift in the sector.
Over 51% of the respondent of this report have stated that they would like to focus on adopting a lesser carbon-intensive energy mix in 2019. The Middle East and Northern Africa respondents have also shown quite a lot of optimism in the growth of the oil and gas sector this year, with over 83% optimism and have agreed upon the imminence of stricter regulation.